Is Mercury General Corp. overvalued or undervalued?

As of 29 July 2025, Mercury General Corp. has moved from fair to attractive in its valuation grade, indicating an improvement in its investment appeal. The company appears undervalued, particularly when considering its P/E ratio of 13, which is significantly lower than the peer average of 15.03 for American Financial Group, Inc. and 19.44 for The Hanover Insurance Group, Inc. Additionally, the PEG ratio of 0.38 suggests that the stock is priced favorably relative to its growth potential.
In comparison to its peers, Mercury General Corp. shows a compelling valuation with an EV to EBITDA of 36.90, which, while high, is offset by its attractive P/E ratio. The company has outperformed the S&P 500 in various time frames, with a year-to-date return of 19.30% compared to the S&P 500's 12.22%, and a one-year return of 33.14% versus 17.14%. This performance reinforces the notion that the stock is currently undervalued relative to its growth prospects and market performance.