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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Mercury General Corporation (XNYS:MCY) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MCY
Name:
MERCURY GENERAL CORPORATION (XNYS:MCY)
Sector:
98.31M
Industry:
Insurance�Property & Casualty
CEO:
Mr. Gabriel Tirador
Total Employees:
4,300
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -6942.86% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MERCURY GENERAL CORPORATION(MCY) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INSURANCE�PROPERTY & CASUALTY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
32.92
One Month Price Target:
$33.01
Six Month Price Target :
$33.45
Likely Price in One Year's Time:
Ticker:
$33.99
Likely Trading Range Today Under (Normal Volatility)
$32.79
Price Upper limit ($) :
$33.02
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$31.5
This week:
$29.75
This month :
$26.58
Other Primary facts
Market Cap:
1.80B
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
55.37M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.59%
-13.36%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$39.51
$36.54
$26.33
$29.30
Medium risk (<10%) entry points
Buy Call
Sell Call
$35.57
Buy Put:
Sell Put:
$34.94
$30.26
$30.90
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MCY
Sharpe Ratio:
-2.10%
Comparison:
MCY, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -251.61% lower than the industry
& is -191.97% lower than the market/S&P 500 average
Average Returns/Yield of
MCY
Daily returns:
-0.03%
Weekly returns:
-0.17%
Monthly returns:
-0.69%
Yearly returns:
10.43%
Comparison of returns:
Average annual returns/yield (last 3 years) is -179.98% below industry average
Classification:
MCY, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.61
Statistical test of Returns:
MCY has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.08%
Weekly Volatility:
4.65%
Monthly Volatility:
9.30%
Yearly Volatility:
32.22%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.93%
Volatility in last five trading days has been -7.14% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.31%
Weekly VaR:
-9.63%
Monthly VaR:
-19.26%
How Much Can the price of
MCY
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-66.70%
This translates to price declining to:
$27.18
This translates to price declining to:
$10.96
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
MCY is a 35.90% riskier investment compared to the market/S&P 500 & is 16.43% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -13.63% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MCY
Beta in relation to market/S&P 500--0.48
Expected beta in 1 year's time:
0.516
Expected beta in 3 year's time:
0.729
Unlevered (debt free) Beta:
0.425
Beta in relation to Nasdaq (XNAS):
0.497
Beta in relation to all global stocks::
0.655
Beta Comparison & Analysis
Beta of competitors/peers::
4.17
Beta is -88.41% lower than peers
Average Industry Beta:
0.555
Beta is -12.95% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
7.89%
Sustainable growth rate is -31.56% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.148
Alpha is -526.06% below industry average alpha yield
Alpha is -942% below the market average
Analysis of Cost of Capital of
MCY
Equity cost of capital:
0.065
Equity cost of capital is -7.09% below industry mean WACC
Unlevered (without debt) cost of capital:
5.68%
Before-tax cost of debt:
4.21%
After-tax cost of debt:
3.32%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.32%
WACC is -5.07% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$68.73
Revenue growth rate per share of (3Y):
0.96
Annual revenue growth rate is -79.58% below industry average
EPS:
-$1.01
Expected Annual growth rate of EPS (3Y):
-8.14%
Expected future EPS growth rate is -152.13% lower than the Insurance�Property & Casualty industry
Free cash flow (FCF) per share:
$7.04
Balance sheet equity growth per share: 1.20%
Equity growth rate per share is -97.34% lower than the industry
Debt per share
$7.31
EBITDA per share
$0.26
Valuation Analysis Today of
MCY
P/E Ratio:
11.76
P/E Ratio of Competitors/Peers:
3.89
P/E ratio is 202.61% higher than main peers & is -32.78% lower than the industry
-
MCY is -286.29% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $52.20
Present value of the expected future dividends only: $39.80
P/S (Price to Sales ratio):
0.48
Price to sales ratio is -80.03% below the industry mean
P/B (Price to book value ratio):
0.96
Price to free cash flow: 4.68
Price to free cash flow ratio is -54.08% lower than the industry
Net income growth rate (3Y):
-4425.93%
Net income growth rate is 15064.47% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: -62.82%
Dividend yeild: 7.71%
Previous Dividend: $0.64
Previous adjusted dividend: $0.64
Previous Dividend: $2.54
Expected next dividend best case: $0.64
Expected next dividend worst case: $0.63
Average dividend payment (long-term): $0.63
Average dividend increase/decrease (growth rate) % per period: 0.08%
Expected next dividend payment date: 28/09/2022
Expected next dividend record date: 14/09/2022
-
Previous dividend payment date: 30/06/2022
Previous dividend record date: 16/06/2022
-
Dividend History:
2022-06-15--$0.64
2021-12-15--$0.64
2021-06-15--$0.63
2022-03-15--$0.64
2021-09-15--$0.63
2021-03-16--$0.63
Dividend growth rate is -99.83% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
21.23%
Net debt to equity ratio:
5.73%
Debt to assets ratio:
6.07%
Net debt to assets ratio:
1.64%
Debt-to-asset ratio is -90.87% below industry average
Ability to repay debt:
Interest coverage ratio:
0.85
Interest coverage ratio is -82.30% less than industry average
Looking forward:
Debt growth rate:
-2.13%
Annual debt growth is -6% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.19%
Analysis of Key Statistics
Correlation of price movement with the market:
0.57
Statistical significance of correlation:
MCY has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.6
Stock price is -5.10% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.6
Correlation of price movement with Nasdaq (^IXIC):
0.003
Covariance of price movement with the market:
0.004
Kurtosis
8.388
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.28
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MCY
Gross Profit Margin Ratio:
100%
Operating Profit Margin Ratio:
7.86%
Operating profit margin is -224.30% lower than the industry
Net Profit Margin Ratio:
100%
Effective Tax Rate:
35.10%
Effective tax rate is 75.61% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-2.93%
Return on equity (ROE) is -136.03% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-0.84%
Return on assets (ROA) is -154.78% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 1.1 years
Stock based compensation to net income ratio:
-0.03%
In-depth Efficiency Analysis
Revenue generated per employee:
885.1K
Each employee generates -26% less revenue than industry average revenue per employee
EBITDA generated per employee:
3.4K
Each employee generates -98% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 13.0K
Each employee generates -109% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
22.9K
Each employee generates -62% less free cash flow than industry average revenue per employee
Assets/Capital per employee
1.2M
Each employee generates -62% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
MCY
PCI
WHITE MOUNTAINS INSURANCE GROUP, LTD. (XNYS:WTM)
CNO FINANCIAL GROUP, INC. (XNYS:CNO PR A)
PIPER SANDLER COMPANIES (XNYS:PIPR)
ARTISAN PARTNERS ASSET MANAGEMENT INC. (XNYS:APAM)
Eaton Vance TxMgdGlDvEIn (XNYS:EXG)
E2OPEN PARENT HOLDINGS, INC. (XNYS:ETWO)
Intercorp Financial Services Inc (XNYS:IFS)
BXS
Current Analyst Ratings
Strong buy�0%
Buy�0%
Hold�8%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.81B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
1.05B
-
-
-
-
283.40M
283.40M
-
17.05M
83.73M
14.53M
299.31M
- 55975.00K
- 86243.00K
- 30268.00K
- 55975.00K
Statement of Cash Flow
Date:
Period:
22.25M
Differed Income Tax :
-
Stock Based Compensation :
15.00K
Change in Working Capital :
58.03M
Accounts Receivables:
- 15509.00K
Other Working Capital:
- 56129.00K
Other Non-Cash Items:
223.20M
Net Cash Provided by Operating Activities:
106.58M
Investments in PP&E:
- 8273.00K
Net Acquisitions:
-
Purchases of Investments:
- 612015.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
295.76M
133.92M
429.68M
714.38M
-
-
-
219.97M
42.80M
9.99M
5.04B
-
-
5.31B
11.98B
6.67B
175.41M
-
-
-
-
-
405.02M
-
412.99M
5.17B
4.76B
98.95M
1.81B
-
-
March 31, 2022 at 6:00:00 AM
3.89B
1.91B
6.67B
5.17B
405.02M
109.3M
505.21M
4.66M
- 110421.00K
- 789.00K
-
-
- 35161.00K
-
- 35950.00K
-
- 39793.00K
295.76M
335.56M
106.58M
- 8273.00K
98.31M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
MCY
2023
2024
2025
2026
2027
$26.11
$26.96
$27.83
$28.74
$29.67