Comparing Progressive Corporation (The) (PGR) and Mercury General Corporation (MCY)

Progressive Corporation (The) (NYSE: PGR) and Mercury General Corporation (NYSE:MCY) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.

Analyst Recommendations

This is a summary of current ratings and price targets for Progressive Corporation (The) and Mercury General Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Progressive Corporation (The) 2 5 5 1 2.38
Mercury General Corporation 0 0 0 0 N/A

Progressive Corporation (The) currently has a consensus price target of $44.31, suggesting a potential downside of 6.19%. Given Progressive Corporation (The)’s higher probable upside, equities analysts plainly believe Progressive Corporation (The) is more favorable than Mercury General Corporation.

Institutional & Insider Ownership

80.3% of Progressive Corporation (The) shares are held by institutional investors. Comparatively, 46.5% of Mercury General Corporation shares are held by institutional investors. 0.6% of Progressive Corporation (The) shares are held by company insiders. Comparatively, 34.3% of Mercury General Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Progressive Corporation (The) and Mercury General Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Progressive Corporation (The) 5.50% 15.62% 3.78%
Mercury General Corporation 2.45% 6.66% 2.43%

Risk & Volatility

Progressive Corporation (The) has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Mercury General Corporation has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Dividends

Progressive Corporation (The) pays an annual dividend of $0.68 per share and has a dividend yield of 1.4%. Mercury General Corporation pays an annual dividend of $2.49 per share and has a dividend yield of 4.3%. Progressive Corporation (The) pays out 28.8% of its earnings in the form of a dividend. Mercury General Corporation pays out 172.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Progressive Corporation (The) has raised its dividend for 3 consecutive years and Mercury General Corporation has raised its dividend for 31 consecutive years. Mercury General Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Progressive Corporation (The) and Mercury General Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Progressive Corporation (The) $24.97 billion 1.10 $2.37 billion $2.36 20.01
Mercury General Corporation $3.25 billion 0.99 $116.43 million $1.44 40.35

Progressive Corporation (The) has higher revenue and earnings than Mercury General Corporation. Progressive Corporation (The) is trading at a lower price-to-earnings ratio than Mercury General Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Progressive Corporation (The) beats Mercury General Corporation on 13 of the 17 factors compared between the two stocks.

About Progressive Corporation (The)

The Progressive Corporation is an insurance holding company. The Company’s insurance subsidiaries and affiliates provide personal and commercial automobile and property insurance, other specialty property-casualty insurance and related services. The Company operates through the Personal Lines, Commercial Lines and Property segments. The Company’s Personal Lines segment writes insurance for personal autos, and recreational and other vehicles. The Commercial Lines business writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned and/or operated predominately by small businesses as a part of the commercial auto market. ASI is a homeowner carrier in the United States, which specializes in personal and commercial property insurance, personal umbrella insurance, and primary and excess flood insurance. The Company’s service business includes Commercial Auto Insurance Procedures/Plans (CAIP) and Commission-based businesses.

About Mercury General Corporation

Mercury General Corporation is an insurance holding company. As of December 31, 2016, the Company and its subsidiaries were engaged in writing personal automobile insurance through 14 insurance subsidiaries in 11 states, principally California. Its segments include Property and Casualty Lines, and Other Lines. Its Property and Casualty segment offers various insurance products to its individual customers and small business customers. Its Other segment offers automobile mechanical breakdown warranties, which are sold through automobile dealerships and credit unions. It also writes homeowners, commercial automobile, commercial property, mechanical breakdown and umbrella insurance. Its insurance policies are sold through independent agents. As of December 31, 2016, it sold its policies through approximately 9,700 independent agents, its owned insurance agencies, Auto Insurance Specialists LLC and PoliSeek AIS Insurance Solutions, Inc., and directly through Internet sales portals.

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