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ZYBERNO
Stock Report
Updated Aug 30, 2026

MERCURY GENERAL CORPORATION (MCY)

Financial Services • NYSE

$102.97
Mercury General Corporation is an American insurance holding company headquartered in Los Angeles, California, that provides personal automobile insurance primarily in California. The company also provides homeowners, renters, business owners, and umbrella insurance, and has expanded beyond California to other states including Texas, Georgia, and Florida.

Professional Investment Analysis

ZYBERNO SCORE →
Is it a great business? Is it getting better?
86.0/100
GREAT BUSINESS
MERCURY GENERAL CORPORATION (MCY) scores 86/100 — exceptional capital returns and consistent cash generation across all measurement periods.
📊 How is the Zyberno Score calculated? +
VALUATION SIGNAL
⚠
Business Model Limitation
MERCURY GENERAL CORPORATION operates in the Insurance industry. Owner Earnings-based DCF analysis — the foundation of both the Margin of Safety and the Brina Gap — is not well-suited to companies whose business model is structurally built around leverage: banks, insurers, mortgage companies, and REITs. These businesses are typically valued using sector-specific metrics such as Price-to-Book, Price-to-FFO, or Net Asset Value. Treat these signals as directional only.
MARGIN OF SAFETY
Is this stock cheap or expensive relative to what the business has historically generated for owners?
+87.1%
Undervalued
Is the market underestimating or overestimating what this business is capable of going forward?
+9.2%
Market Underestimates
↑ UNDER
+50%
Brina Gap
-50%
↓ OVER
← OVERVALUED
-100%
Margin of Safety
UNDERVALUED →
+100%
UNDERESTIMATED
GROWTH
DOUBLE
DISCOUNT
EXPENSIVE
HYPE
VALUE
TRAP
0,0
MoS +87.1%  ·  Gap +9.2%

Two independent signals. One tells you if the stock is cheap relative to what the business has historically generated for owners — the Margin of Safety. The other tells you if the market is underestimating what the business is capable of going forward — the Brina Gap.

They are calculated from completely different data sources and answer completely different questions. The Margin of Safety reads the past. The Brina Gap reads the present economics and compares them against what the current stock price is assuming about the future.

When both point in the same direction simultaneously — DOUBLE DISCOUNT — the probability of genuine mispricing is high. The market is wrong on two independent dimensions at once, which is rare and significant.

The most dangerous scenario is not an overvalued stock — those are easy to avoid. It is a VALUE TRAP: a stock that appears cheap historically but where the market is already pricing in stronger growth than the business fundamentals support. Without the Brina Gap signal this looks identical to a genuine opportunity. The matrix separates them instantly.

The Brina Gap is the more powerful of the two signals. Most investors and analytical tools focus on valuation alone — whether a stock is cheap relative to earnings. Far fewer systematically compare what the business economics structurally support against what the stock price is actually assuming. That gap between fundamental growth potential and market expectations is where the most reliable mispricings live, and where this matrix earns its value.

Use this as your first filter. A stock in DOUBLE DISCOUNT territory is worth investigating. Everything else requires either more caution or a specific reason to act.

DOUBLE DISCOUNT OPPORTUNITY
MERCURY GENERAL CORPORATION (MCY) scores a Double Discount — Margin of Safety +87.1% against historical owner earnings and Brina Gap +9.2% against forward business economics. Both independent signals point to undervaluation simultaneously.
🎯 Expected Annual Return →
80.7%
Margin of Safety convergence — your return if the market re-prices to intrinsic value (5-yr annualised)
12.9%
Brina Gap convergence — your return if the market corrects the growth mispricing the Gap measures
24.3%
Yield + growth — what the business alone earns you, even if the market never re-rates
💰 How is Margin of Safety calculated? +
📈 How is Brina Gap calculated? +

Critical Financial Health Indicators

Return on Equity (Profitability):EXCELLENT (37.2%)
Debt-to-Equity (Solvency Risk):GOOD (0.34x)
Operating Margin (Operational Efficiency):GOOD (18.3%)
Return on Capital (Capital Efficiency):EXCELLENT (35.3%)
📊 Valuation Trilogy
Three interconnected metrics for complete valuation analysis
💎
Intrinsic Value
DCF Fair Value
$797.44
🛡️
Margin of Safety
Valuation Gap
87.1%
🎯
Expected Return
Projected Annual
80.7%
Click any metric for full methodology and detailed analysis
Zyberno's Verdict

According to Zyberno, MERCURY GENERAL CORPORATION (MCY) is a buy opportunity — GREAT BUSINESS (86/100) trading at a Margin of Safety of +87.1% against historical owner earnings, with a Brina Gap of +9.2% confirming the market is underestimating its forward growth capacity.

According to Zyberno's DCF model, MERCURY GENERAL CORPORATION (MCY) trades at $102.97 against an estimated intrinsic value per share of $797.44 — a +87.1% Margin of Safety based on Owner Earnings of $1.42B TTM, projected at 86.3% growth for 10 years with a 2.5% terminal growth rate. The Brina Gap of +9.2% strengthens the case: based on the company's ROIC (35.3%) and reinvestment rate (-1.8%), the business can fundamentally grow at -0.6% — but the current enterprise value implies the market expects -9.8%. This places MCY in the Double Discount quadrant of the Brina Matrix, the rarest and most attractive position. Zyberno's model translates this into a 5-year expected return of 80.7% annually.

Over the trailing twelve months, MCY generated $1.42B in Owner Earnings. Capital was deployed as follows: $70.33M paid as dividends, $62.09M invested in capital expenditures. Reinvestment rate: -1.8%. Owner Earnings have grown at 86.3% annually over the trailing five years using log-linear regression.

DIVISION I: EXECUTIVE SUMMARY
A. Market Valuation

Market Price & Capitalization (2)

Current Price:102.97
Market Cap:$5.70B

Valuation Multiples (4)

P/E Ratio:
6.09x
📊 Click to view full MCY P/E analysis →
P/B Ratio:2.01x
P/S Ratio:0.90x
Peg Ratio:0.04x

Enterprise Metrics (3)

Enterprise Value:$5.52B
Ev Ebitda Ratio:4.55x
Pfcf Ratio:4.02x

Price Action & Momentum (3)

12-1 Momentum:
+57.2% (85th pctile)
📈 Click to view full MCY Momentum analysis →
Momentum Percentile:85 / 100
% of 52-Week High:91.1%
B. Profitability Assessment

Return Metrics (7)

ROE:
37.2%
📊 Click to view full MCY ROE analysis →
ROA:9.5%
Roic:
35.3%
📊 Click to view full MCY ROIC analysis →
Reinvestment Rate:-1.8%
Fundamental Growth Rate (g):-0.6%
Market-Implied Growth Rate:-9.8%
Brina Gap:
9.2%
☷ Click to view full MCY Brina Gap analysis →

Margin Analysis (3)

Operating Margin Ttm:18.3%
Net Margin Ttm:14.8%
Ebitda Margin:19.1%

TTM Performance (3)

Gross Margin Ttm:99.7%
Operating Margin Ttm:18.3%
Net Margin Ttm:14.8%

Yield Metrics (3)

Earnings Yield:$16.43
Owner Earnings Yield:$24.89
Dividend Yield:1.2%
C. Log-Linear Regression Growth Trends

Earnings Surprise (SUE) (3)

Earnings Surprise (SUE):
+0.26
📊 Click to view full MCY Earnings Surprise analysis →
EPS Surprise vs Expected:18.4%
Latest Earnings Filed:2026-08-04

Revenue Growth (Linear) (1)

Revenue Growth Rate (Linear):14.4%

Earnings Growth (Linear) (1)

Net Income Growth Rate (Linear):43.0%

Cash Flow Growth (Linear) (2)

Free Cash Flow Growth Rate (Linear):86.2%
Operating Cash Flow Growth Rate (Linear):76.8%

Operating Growth (Linear) (1)

Operating Income Growth Rate (Linear):43.8%
D. Financial Stability

Liquidity Ratios (3)

Current Ratio:1.37x
Quick Ratio:1.37x
Cash Ratio:0.22x

Leverage Analysis (3)

Debt To Equity Ttm:0.34x
Debt-to-Equity Ratio:0.34x
Debt To Ebitda:1.25x

Coverage Ratios (2)

Interest Coverage Ratio:22.91x
Times Interest Earned:22.91

Capital Structure (4)

Working Capital:2,836,025,000.00
Cash And Cash Equivalents:1,700,830,000.00
Long Term Debt:$943.75M
Net Debt:-$182.08M
DIVISION II: FINANCIAL STATEMENTS ANALYSIS
A. Income Statement Analysis

Revenue Components (2)

Revenue TTM: $6.34B
Linear Growth: 14.4%
📊 Click to view full MCY Revenue analysis & methodology →
Cost Of Revenue Ttm:$16.60M

Profitability Breakdown (2)

Gross profit TTM: $6.33B
Linear Growth: 14.4%
📊 Click to view full MCY Gross Profit analysis & methodology →
Operating income TTM: $1.16B
Linear Growth: 43.8%
📊 Click to view full MCY Operating Income analysis & methodology →

Bottom Line Performance (3)

Net income TTM: $936.87M
Linear Growth: 43.0%
📊 Click to view full MCY Net Income analysis & methodology →
Income Before Tax:$1.16B
Ebitda Ttm:1,213,280,000.00

Operating Expenses (5)

Operating Expenses:0.00
R And D Expense:0.00
Sga Expense:0.00
Income Tax Expense:$225.31M
Interest Expense:28,965,000.00

Expense Ratios (3)

R And D To Revenue Percentage:0.0%
Sga To Revenue Percentage:0.0%
Ebitda Margin:19.1%
B. Balance Sheet Analysis

Asset Composition (5)

Total Assets:$10.54B
Current Assets:$10.54B
Ppe Net:151,109,000.00
Goodwill:42,796,000.00
Intangible Assets:$6.40M

Liability Structure (4)

Total Liabilities:7,706,340,000.00
Current Liabilities:7,706,340,000.00
Long Term Debt:$943.75M
Short Term Debt:$575.00M

Equity & Capital (3)

Equity:$2.84B
Retained Earnings:$2.74B
Common Stock:99,699,000.00

Working Capital Items (3)

Accounts Receivable:1,200,000.00
Inventory:0.00
Accounts Payable:422,764,000.00

Special Items (2)

Contract Liabilities:0.00
Stock Based Compensation:14,633,000.00
C. Cash Flow Analysis

Operating Activities (2)

Operating cash flow TTM: $1.48B
Linear Growth: 76.8%
Free cash flow TTM: $1.42B
Linear Growth: 86.2%
📊 Click to view full MCY Free Cash Flow analysis & methodology →

Investment Activities (2)

Investing Cash Flow:-$272.31M
Capital Expenditures Ttm:62,090,000.00

Financing Activities (3)

Financing Cash Flow:-$17.98M
Dividends Paid Ttm:70,332,000.00
Stock Repurchase:0.00

Capital Transactions (3)

Common Stock Issuance:0.00
Long Term Debt Issuance:$0.00
Long Term Debt Repayments:$0.00

Non-Cash Items (1)

Depreciation Amortization Ttm:51,100,000.00
DIVISION III: OPERATIONAL METRICS
A. Per Share Analysis

Earnings Per Share (3)

EPS (Basic TTM):16.92
Eps diluted TTM: $16.92
Linear Growth: 42.9%
📊 Click to view full MCY EPS analysis & methodology →
Earnings Per Share Ttm:$16.91

Revenue & Cash Per Share (3)

Sales Per Share Ttm:114.50
Operating Cash Flow Per Share:$19.63
Fcf Per Share Ttm:25.63

Book Value & Capital (2)

Book Value Per Share:$51.20
Cash Per Share:30.71

Dividend Policy (1)

Dividend Payout Ratio:7.51x
B. Operational Efficiency

Asset Utilization (2)

Asset Turnover Ttm:0.64x
Working Capital Turnover Ttm:2.24x

Receivables Management (2)

Receivables Turnover Ttm:5,285.23x
Days Sales Outstanding Ttm:0.07

Inventory Management (2)

Inventory Turnover Ttm:-999.00x
Days Inventory Outstanding Ttm:-999.00

Payables & Cash Cycle (2)

Days Payable Outstanding:9,295.71
Cash Conversion Cycle:-10,294.65
C. Quality & Risk Metrics

Financial Quality Scores (2)

Financial Strength Score:60.00
Quality Score:90.00

Market Metrics (2)

Beta:0.00x
Volatility Category:unknown
DIVISION IV: INVESTMENT ANALYSIS
A. Value Investment Framework

Owner Earnings Analysis (3)

Owner earnings TTM: $1.42B
Linear Growth: 86.3%
📊 Click to view full MCY Owner Earnings analysis & methodology →
Owner Earnings Per Share:$25.63
Owner Earnings Yield:$24.89

Growth Assessment (1)

Owner Earnings Growth Rate:$86.25

Damodaran Growth Analysis (4)

Reinvestment Rate:-1.8%
Fundamental Growth Rate (g):-0.6%
Market-Implied Growth Rate:-9.8%
Brina Gap:
9.2%
☷ Click to view full MCY Brina Gap analysis →

Intrinsic Value Models (1)

Intrinsic Value:
$44.17B
📊 Click to view full MCY DCF valuation →

Margin of Safety (1)

Margin Of Safety:
87.1%
📊 Click to view full MCY valuation analysis →

Return Scenarios (2)

Theoretical 5-Year Return:
80.7%
📊 Click to view full MCY expected return analysis →
Forward Expected Return (Yield + Growth):
24.3%
📊 Click to view full MCY expected return analysis →

Investment Assessment (1)

Buffett Assessment:Excellent margin of safety
B. Log-Linear Regression Growth Analysis

Growth Rates (Log-Linear Regression) (3)

Revenue Growth Rate (Linear):14.4%
Net Income Growth Rate (Linear):43.0%
Operating Income Growth Rate (Linear):43.8%

Cash Flow Growth Rates (2)

Free Cash Flow Growth Rate (Linear):86.2%
Operating Cash Flow Growth Rate (Linear):76.8%

Other Growth Rates (3)

Gross Profit Growth Rate (Linear):14.4%
Book Value Growth Rate (Linear):13.1%
Owner Earnings Growth Rate:$86.25
C. Company Profile & Context

Corporate Information (6)

Symbol:MCY
Company Name:MERCURY GENERAL CORPORATION
Sector:Financial Services
Industry:Insurance
Exchange:NYSE
Country:United States

Market Classification (3)

Market Cap Category:N/A
Price Category:high
Volume Category:N/A

Share Structure (3)

Shares Outstanding:55.39M
Shares Outstanding Basic:55.39M
Shares Outstanding Diluted:55.39M

Data Processing Info (3)

Processing Version:v3.0
Last Updated:2026-08-30 02:59:26 UTC
Data Timestamp:2026-08-30T02:59:26.712987
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