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. More Details
Is Ares Capital undervalued compared to its fair value and its price relative to the market?
19.8%
Undervalued compared to fair value
Share Price vs. Fair Value
Below Fair Value: ARCC ($18.33) is trading below our estimate of fair value ($22.86)
Significantly Below Fair Value: ARCC is trading below fair value, but not by a significant amount.
Price To Earnings Ratio
PE vs Industry: ARCC is good value based on its PE Ratio (16.1x) compared to the US Capital Markets industry average (23.4x).
PE vs Market: ARCC is good value based on its PE Ratio (16.1x) compared to the US market (21.2x).
Price to Earnings Growth Ratio
PEG Ratio: ARCC is good value based on its PEG Ratio (0.8x)
Price to Book Ratio
PB vs Industry: ARCC is good value based on its PB Ratio (1.1x) compared to the US Capital Markets industry average (10.9x).
Future Growth
How is Ares Capital forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?
19.7%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: ARCC's forecast earnings growth (19.7% per year) is above the savings rate (2%).
Earnings vs Market: ARCC's earnings (19.7% per year) are forecast to grow slower than the US market (20.2% per year).
High Growth Earnings: ARCC's earnings are forecast to grow, but not significantly.
Revenue vs Market: ARCC's revenue (3.9% per year) is forecast to grow slower than the US market (10.4% per year).
High Growth Revenue: ARCC's revenue (3.9% 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 (10.4%).
Past Performance
How has Ares Capital performed over the past 5 years?
-0.01%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: ARCC has a large one-off loss of $292.0M impacting its December 31 2020 financial results.
Growing Profit Margin: ARCC's current net profit margins (32%) are lower than last year (51.3%).
Past Earnings Growth Analysis
Earnings Trend: ARCC's earnings have declined by 0.01% 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 (-38.3%) over the past year, making it difficult to compare to the Capital Markets industry average (9.9%).
Return on Equity
High ROE: ARCC's Return on Equity (6.7%) is considered low.
Financial Health
How is Ares Capital's financial position?
Financial Position Analysis
Short Term Liabilities: ARCC's short term assets ($549.0M) exceed its short term liabilities ($414.0M).
Long Term Liabilities: ARCC's short term assets ($549.0M) do not cover its long term liabilities ($8.6B).
Debt to Equity History and Analysis
Debt Level: ARCC's debt to equity ratio (119.4%) is considered high.
Reducing Debt: ARCC's debt to equity ratio has increased from 79.5% to 119.4% over the past 5 years.
Debt Coverage: ARCC's operating cash flow is negative, therefore debt is not well covered.
Interest Coverage: ARCC's interest payments on its debt are well covered by EBIT (3.7x coverage).
Balance Sheet
Dividend
What is Ares Capital current dividend yield, its reliability and sustainability?
8.73%
Current Dividend Yield
Upcoming Dividend Payment
Dividend Yield vs Market
Notable Dividend: ARCC's dividend (8.73%) is higher than the bottom 25% of dividend payers in the US market (1.35%).
High Dividend: ARCC's dividend (8.73%) is in the top 25% of dividend payers in the US market (3.72%)
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: With its high payout ratio (140.2%), ARCC's dividend payments are not well covered by earnings.
Future Payout to Shareholders
Future Dividend Coverage: ARCC's dividends in 3 years are forecast to be covered by earnings (88.8% payout ratio).
Management
How experienced are the management team and are they aligned to shareholders interests?
6.6yrs
Average management tenure
CEO
Robert DeVeer (47 yo)
6.58yrs
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
Name
Position
Tenure
Compensation
Ownership
Michael Arougheti
Co-Chairman & Executive VP
6.58yrs
no data
0.30% $ 24.0m
Bennett Rosenthal
Co-Founder & Co-Chairman
17.08yrs
no data
no data
Robert DeVeer
CEO & Director
6.58yrs
no data
0.069% $ 5.5m
Mitchell Goldstein
Co-President
6.58yrs
no data
0.063% $ 5.1m
Michael Smith
Co-President
6.58yrs
no data
0.043% $ 3.4m
Penelope Roll
Chief Financial Officer
10.17yrs
no data
0.015% $ 1.2m
Scott Lem
Chief Accounting Officer
7.17yrs
no data
no data
John Stilmar
Managing Director of IR
no data
no data
no data
Joshua Bloomstein
VP, General Counsel & Secretary
11.08yrs
no data
0.0038% $ 302.3k
Lisa Morgan
Chief Compliance Officer
1.83yrs
no data
no data
Carl Drake
Partner/Head of Public Investor Relations & Communications
no data
no data
no data
Mark Affolter
12.58yrs
no data
no data
6.6yrs
Average Tenure
48yo
Average Age
Experienced Management: ARCC's management team is seasoned and experienced (6.6 years average tenure).
Board Members
Name
Position
Tenure
Compensation
Ownership
Michael Arougheti
Co-Chairman & Executive VP
6.58yrs
no data
0.30% $ 24.0m
Bennett Rosenthal
Co-Founder & Co-Chairman
17.08yrs
no data
no data
Robert DeVeer
CEO & Director
6.58yrs
no data
0.069% $ 5.5m
Robert Rosen
Director
17.08yrs
no data
0.011% $ 879.8k
Michael Parks
Independent Director
1.25yrs
US$52.50k
0.0049% $ 388.7k
Eric Siegel
Lead Independent Director
10.5yrs
US$294.50k
0.012% $ 971.0k
Daniel Kelly
Independent Director
4.75yrs
US$253.50k
0.0078% $ 621.5k
H. Bartlett
Independent Director
8.33yrs
US$249.50k
0.0063% $ 499.9k
Ann Bates
Independent Director
10.83yrs
US$278.50k
0.0073% $ 586.3k
Steven McKeever
Independent Director
8.42yrs
US$260.50k
0.0079% $ 628.7k
8.4yrs
Average Tenure
61yo
Average Age
Experienced Board: ARCC's board of directors are considered experienced (8.4 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if 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
Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle marke...
Company Analysis and Financial Data Status
All financial data provided by Standard & Poor's Capital IQ.
Data
Last Updated (UTC time)
Company Analysis
2021/02/26 23:52
End of Day Share Price
2021/02/26 00:00
Earnings
2020/12/31
Annual Earnings
2020/12/31
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.