Mercury General (MCY) shares soared 3.2% in the last trading session to close at $107.47. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.9% gain over the past four weeks.
Mercury General is poised to witness top-line growth, backed by sustained premium increases. Premiums have been benefiting from rate increases in its lines of insurance business and a higher number of policies written. Higher average invested assets and higher yields on investments should continue to support investment results. A solid capital position supported by consistent cash flow enables the company to deploy capital effectively via dividends. Mercury General has a reinsurance program in place that strives to protect against losses.
This auto insurance company is expected to post quarterly earnings of $1.80 per share in its upcoming report, which represents a year-over-year change of -32.6%. Revenues are expected to be $1.58 billion, up 7.8% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Mercury General, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MCY going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Mercury General is a member of the Zacks Insurance - Property and Casualty industry. One other stock in the same industry, Essent Group (ESNT), finished the last trading session 3.5% higher at $64.01. ESNT has returned 6% over the past month.
Essent Group's consensus EPS estimate for the upcoming report has changed -1.8% over the past month to $1.79. Compared to the company's year-ago EPS, this represents a change of -7.3%. Essent Group currently boasts a Zacks Rank of #2 (Buy).
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This article originally published on Zacks Investment Research (zacks.com).