Financial Analysis: Mercury General Corporation (MCY) versus Infinity Property and Casualty Corporation (NASDAQ:IPCC)

Mercury General Corporation (NYSE: MCY) and Infinity Property and Casualty Corporation (NASDAQ:IPCC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Mercury General Corporation and Infinity Property and Casualty Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Mercury General Corporation $3.25 billion 0.97 $116.43 million $1.44 39.66
Infinity Property and Casualty Corporation $1.55 billion 0.61 $108.88 million $3.62 23.65

Mercury General Corporation has higher revenue and earnings than Infinity Property and Casualty Corporation. Infinity Property and Casualty Corporation 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.

Dividends

Mercury General Corporation pays an annual dividend of $2.49 per share and has a dividend yield of 4.4%. Infinity Property and Casualty Corporation pays an annual dividend of $2.32 per share and has a dividend yield of 2.7%. 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. Infinity Property and Casualty Corporation pays out 64.1% of its earnings in the form of a dividend. Mercury General Corporation has raised its dividend for 9 consecutive years and Infinity Property and Casualty Corporation has raised its dividend for 31 consecutive years.

Insider & Institutional Ownership

47.0% of Mercury General Corporation shares are held by institutional investors. Comparatively, 95.2% of Infinity Property and Casualty Corporation shares are held by institutional investors. 34.3% of Mercury General Corporation shares are held by company insiders. Comparatively, 3.2% of Infinity Property and Casualty 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 Mercury General Corporation and Infinity Property and Casualty Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mercury General Corporation 2.45% 6.66% 2.43%
Infinity Property and Casualty Corporation 2.58% 5.16% 1.49%

Analyst Recommendations

This is a summary of recent recommendations for Mercury General Corporation and Infinity Property and Casualty Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercury General Corporation 0 0 0 0 N/A
Infinity Property and Casualty Corporation 0 1 1 0 2.50

Infinity Property and Casualty Corporation has a consensus target price of $99.50, suggesting a potential upside of 16.24%. Given Infinity Property and Casualty Corporation’s higher probable upside, analysts plainly believe Infinity Property and Casualty Corporation is more favorable than Mercury General Corporation.

Risk & Volatility

Mercury General Corporation has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Infinity Property and Casualty Corporation has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

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.

About Infinity Property and Casualty Corporation

Infinity Property and Casualty Corporation is a holding company. The Company’s segments include Personal Auto, Commercial Vehicle and Classic Collector (its segments are Personal Auto and Commercial Vehicle). The Company writes personal automobile insurance with a concentration on nonstandard automobile insurance, commercial vehicle insurance and classic collector automobile insurance. The Company offers personal and commercial automobile insurance in states, including Arizona, California, Florida and Texas. Personal Automobile is its insurance product, which provides coverage to individuals for liability to others for bodily injury and property damage and for physical damage to an insured’s own vehicle from collision and various other perils. Commercial Vehicle provides coverage to businesses for liability to others for bodily injury and property damage and for physical damage to vehicles from collision. Classic Collector provides protection for classic collectible automobiles.




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