Mercury General Corporation

Dividend Yield: 5.50%

Mercury General Corporation (NYSE: MCY) shares currently have a dividend yield of 5.50%.

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance. The company also writes homeowners, commercial automobile and property, mechanical breakdown, fire, and umbrella insurance. The company has a P/E ratio of 22.38.

The average volume for Mercury General Corporation has been 369,400 shares per day over the past 30 days. Mercury General Corporation has a market cap of $2.5 billion and is part of the insurance industry. Shares are up 13.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Mercury General Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • MCY's revenue growth trails the industry average of 17.7%. Since the same quarter one year prior, revenues slightly increased by 2.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • MCY's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • MERCURY GENERAL CORP's earnings per share declined by 9.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MERCURY GENERAL CORP reported lower earnings of $2.13 versus $3.48 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $2.13).
  • In its most recent trading session, MCY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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