NasdaqGS:ARCC

Stock Analysis Report

Executive Summary

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.

Rewards


Snowflake Analysis


Similar Companies

Share Price & News

How has Ares Capital's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARCC's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-14.5%

ARCC

-4.5%

US Capital Markets

-4.1%

US Market


1 Year Return

-44.7%

ARCC

-15.6%

US Capital Markets

-14.9%

US Market

Return vs Industry: ARCC underperformed the US Capital Markets industry which returned -15.6% over the past year.

Return vs Market: ARCC underperformed the US Market which returned -14.9% over the past year.


Shareholder returns

ARCCIndustryMarket
7 Day-14.5%-4.5%-4.1%
30 Day-46.5%-21.1%-19.1%
90 Day-48.3%-25.9%-23.4%
1 Year-39.1%-44.7%-13.9%-15.6%-13.2%-14.9%
3 Year-27.1%-45.1%5.1%-1.0%10.7%3.5%
5 Year-8.9%-43.7%29.0%16.9%28.5%14.5%

Price Volatility Vs. Market

How volatile is Ares Capital's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Ares Capital undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ARCC ($9.65) is trading below our estimate of fair value ($23.43)

Significantly Below Fair Value: ARCC is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ARCC is good value based on its PE Ratio (5.2x) compared to the Capital Markets industry average (33x).

PE vs Market: ARCC is good value based on its PE Ratio (5.2x) compared to the US market (12.5x).


Price to Earnings Growth Ratio

PEG Ratio: ARCC's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: ARCC is good value based on its PB Ratio (0.6x) compared to the US Capital Markets industry average (7.7x).

Future Growth

How is Ares Capital forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

-0.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARCC's earnings are forecast to decline over the next 3 years (-0.6% per year).

Earnings vs Market: ARCC's earnings are forecast to decline over the next 3 years (-0.6% per year).

High Growth Earnings: ARCC's earnings are forecast to decline over the next 3 years.

Revenue vs Market: ARCC's revenue (2.5% per year) is forecast to grow slower than the US market (7.1% per year).

High Growth Revenue: ARCC's revenue (2.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARCC's Return on Equity is forecast to be low in 3 years time (10.8%).

Past Performance

How has Ares Capital performed over the past 5 years?

13.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARCC has high quality earnings.

Growing Profit Margin: ARCC's current net profit margins (51.9%) are lower than last year (64.2%).


Past Earnings Growth Analysis

Earnings Trend: ARCC's earnings have grown by 13.5% per year over the past 5 years.

Accelerating Growth: ARCC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ARCC had negative earnings growth (-7.6%) over the past year, making it difficult to compare to the Capital Markets industry average (9.7%).


Return on Equity

High ROE: ARCC's Return on Equity (10.6%) is considered low.

Financial Health

How is Ares Capital's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: ARCC has a low level of unsold assets or inventory.

Debt Coverage by Assets: ARCC's debt is not covered by short term assets (assets are 0x debt).


Financial Institutions Analysis

Asset Level: ARCC's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if ARCC has a sufficient allowance for bad loans.

Low Risk Liabilities: ARCC reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if ARCC has an acceptable proportion of non-loan assets held.

Low Risk Deposits: ARCC has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if ARCC has an appropriate level of bad loans.

Dividend

What is Ares Capital's current dividend yield, its reliability and sustainability?

16.58%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ARCC's dividend (16.58%) is higher than the bottom 25% of dividend payers in the US market (2.04%).

High Dividend: ARCC's dividend (16.58%) is in the top 25% of dividend payers in the US market (5.7%)


Stability and Growth of Payments

Stable Dividend: ARCC's dividends per share have been stable in the past 10 years.

Growing Dividend: ARCC's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (86.2%), ARCC's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ARCC's dividends in 3 years are not forecast to be well covered by earnings (91.9% payout ratio).

Management

How experienced are the management team and are they aligned to shareholders interests?

6.0yrs

Average management tenure


CEO

Robert DeVeer (46yo)

5.75s

Tenure

Mr. Robert Kipp DeVeer, III, serves as Director of Ares Management Corporation since February 13, 2020. Mr. DeVeer is Director at Ares Capital Corporation since 2015 and has also been its Chief Executive O ...


Leadership Team

NamePositionTenureCompensationOwnership
Michael Arougheti
Co-Chairman & Executive VP5.75yrsno data0.28% $11.4m
Bennett Rosenthal
Co-Founder16.25yrsno datano data
Robert DeVeer
CEO & Director5.75yrsno data0.053% $2.2m
Mitchell Goldstein
Co-President5.75yrsno data0.063% $2.6m
Michael Smith
Co-President5.75yrsno data0.036% $1.5m
Penelope Roll
Chief Financial Officer9.33yrsno data0.017% $679.7k
Scott Lem
Chief Accounting Officer6.33yrsno datano data
John Stilmar
Managing Director of IRno datano datano data
Joshua Bloomstein
VP, General Counsel & Secretary10.25yrsno datano data
Miriam Krieger
Chief Compliance Officer8.75yrsno datano data

6.0yrs

Average Tenure

47yo

Average Age

Experienced Management: ARCC's management team is seasoned and experienced (6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Michael Arougheti
Co-Chairman & Executive VP5.75yrsno data0.28% $11.4m
Bennett Rosenthal
Co-Founder16.25yrsno datano data
Robert DeVeer
CEO & Director5.75yrsno data0.053% $2.2m
Robert Rosen
Director16.25yrsno data0.0089% $364.3k
Michael Parks
Independent Class II Director0.42yrno data0.0010% $41.8k
Eric Siegel
Lead Independent Director9.67yrsUS$242.00k0.012% $493.5k
Daniel Kelly
Independent Director3.92yrsUS$221.00k0.0075% $307.7k
H. Bartlett
Independent Director7.5yrsUS$221.00k0.0064% $263.4k
Ann Bates
Independent Director10yrsUS$231.50k0.0075% $308.9k
Steven McKeever
Independent Director7.58yrsUS$223.00k0.0080% $329.0k

7.5yrs

Average Tenure

60yo

Average Age

Experienced Board: ARCC's board of directors are considered experienced (7.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: ARCC insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Ares Capital Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Ares Capital Corporation
  • Ticker: ARCC
  • Exchange: NasdaqGS
  • Founded: 2004
  • Industry: Asset Management and Custody Banks
  • Sector: Diversified Financials
  • Market Cap: US$4.102b
  • Shares outstanding: 425.09m
  • Website: https://www.arescapitalcorp.com

Location

  • Ares Capital Corporation
  • 245 Park Avenue
  • 44th Floor
  • New York
  • New York
  • 10167
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ARCCNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDOct 2004
9A2DB (Deutsche Boerse AG)YesCommon StockDEEUROct 2004
0HHPLSE (London Stock Exchange)YesCommon StockGBUSDOct 2004
9A2BRSE (Berne Stock Exchange)YesCommon StockCHCHFOct 2004

Biography

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/03 06:51
End of Day Share Price2020/04/02 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.