Is Mercury General (MCY) Stock Undervalued Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Mercury General (MCY). MCY is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 12.08. This compares to its industry's average Forward P/E of 27.65. Over the past year, MCY's Forward P/E has been as high as 163.64 and as low as 6.83, with a median of 13.27.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MCY has a P/S ratio of 0.79. This compares to its industry's average P/S of 1.3.

Finally, our model also underscores that MCY has a P/CF ratio of 9.50. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. MCY's current P/CF looks attractive when compared to its industry's average P/CF of 12.78. MCY's P/CF has been as high as 10.18 and as low as 4.83, with a median of 7.64, all within the past year.

These are just a handful of the figures considered in Mercury General's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MCY is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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