Mercury General Corporation (MCY) Stock Analysis & Winston Score

Mercury General Corporation sells car insurance to everyday drivers. It also offers homeowners, renters, and umbrella insurance policies. The company focuses mainly on individual consumers rather than large businesses, and it operates primarily in California, where it is one of the largest private passenger auto insurers in the state.

Mercury makes money by collecting premiums from policyholders and investing that cash while it waits to pay out claims. The company sells policies through a network of independent agents rather than directly online, which is a different approach than competitors like Geico or Progressive. Mercury operates in about a dozen states but depends heavily on California, which creates concentration risk — if California faces major wildfires, earthquakes, or regulatory changes to how insurers can price policies, it can significantly hurt the company's profits.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+10.5% YoY

YoY Growth Rate

Steady revenue growth

EPS Growth

+275.5% YoY

YoY Growth Rate

Strong earnings growth

R&D Spend

$0/ year

0.0% of revenue

Below sector average (7%)

Research and development spending

Insider Activity

52.1%ownership

Insiders own a meaningful stake in the company

Cash Position

Cash flow positive

$1.4B cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

Company generates more cash than it spends — no dilution risk from fundraising

Growth + cash flow

Mercury General Corporation is a rare growth stock that's already generating positive cash flow while growing at 10%. The Winston Score doesn't fully credit this transition from "burner" to "earner."

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Share count broadly stable

+0.0% over 4y

The share count has stayed roughly flat over this period — little dilution or buyback activity.

Diluted shares outstanding: 55.4M (2021) → 55.4M (2025)

Score breakdown

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Quality

Gross Margin

39.4%

Modest — 39.4% gross margin

Operating Margin

15.3%

Healthy — 15.3% operating margin

ROCE

7.4%

Weak — 7.4% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+9.7%

Steady sales growth (9.7% YoY)

EPS YoY

+193.4%

Earnings growing fast (193.4% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

8/8 quarters

Every recent quarter grew earnings vs last year

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Cash Flow

Cash Conversion

176%

Turns 176% of profit into real cash

FCF Margin

23.1%

Converts sales into free cash efficiently (23.1%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

Debt / Equity

0.22

Conservative — low debt load (0.22)

Interest Cover

36.87x

Comfortably covers interest (36.9x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

7.0x

Attractive valuation — P/E 7.0

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward

-2.0

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield

1.24%

Small dividend — 1.24% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+0.0%

Dividend flat

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