Mercury General Corporation Just Reported A Surprise Profit, And Analysts Lifted Their Estimates
Shareholders of Mercury General Corporation (NYSE:MCY) will be pleased this week, given that the stock price is up 15% to US$46.18 following its latest yearly results. Mercury General beat expectations by 5.6% with revenues of US$4.6b. It also surprised on the earnings front, with an unexpected statutory profit of US$1.74 per share a nice improvement on the losses that the analyst forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Mercury General after the latest results.
Check out our latest analysis for Mercury General
Taking into account the latest results, the consensus forecast from Mercury General's single analyst is for revenues of US$5.25b in 2024. This reflects a solid 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 67% to US$2.90. In the lead-up to this report, the analyst had been modelling revenues of US$4.94b and earnings per share (EPS) of US$1.95 in 2024. So it seems there's been a definite increase in optimism about Mercury General's future following the latest results, with a massive increase in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analyst has increased their price target for Mercury General 22% to US$55.00on the back of these upgrades.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mercury General's past performance and to peers in the same industry. It's clear from the latest estimates that Mercury General's rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Mercury General to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analyst upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Mercury General following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Mercury General going out as far as 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Mercury General you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
