MCY
Mercury General Corporation
$102.29
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.0% below fair value
You pay
$102.29
Bear
$109.79
Fair
$144.10
Bull
$145.01
Bear
$109.79
+7.3%
ROTCE 20.0% → 3.03x TBV
Fair
$144.10
+40.9%
ROTCE 25.0% → 3.98x TBV
Bull
$145.01
+41.8%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
26.9%
9.3%
Key Value Driver
ROTCE (26.9%) vs. cost of equity (9.3%)
Implied Market Multiple
2.82x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$90.00
Divergence from AlphaVal
60%
Summary
With ROTCE of 26.9% vs. 9.3% cost of equity, fair P/TBV is 3.98x on $36.25 tangible book, implying $144.10 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $90.00 (from 7 analysts). Our estimate is 60% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly