Ares Management (ARES): Examining Valuation After Recent Share Price Decline

Ares Management (ARES) has recently seen its stock underperform over the past month, dipping by nearly 8%. Investors appear to be weighing recent performance against the company’s longer-term track record and resilient earnings growth.

See our latest analysis for Ares Management.

While Ares Management’s share price has slipped nearly 8% in the last month, this follows years of impressive overall returns for investors. The one-year total shareholder return is down 8.6%, reflecting some cooling momentum compared to the robust 114% total return seen over three years and a remarkable 303% gain over five years. With the stock recently trading at $150.52, investors are watching to see whether growth expectations or risk concerns will shape its next move.

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With shares still trading nearly 20% below analyst targets, but recent gains cooling, investors face a key question: is this the moment to buy Ares Management at a relative bargain, or has the market already priced in its future growth?

Most Popular Narrative: 16.5% Undervalued

With shares having ended at $150.52 and the widely followed narrative suggesting a significantly higher fair value, investor expectations and market reality appear misaligned. The following perspective uncovers a growth story that explains why this valuation gap exists.

Robust international fundraising, particularly in Europe and Asia-Pacific, and ongoing success in deepening distribution partnerships are broadening Ares' addressable markets, increasing global deal flow, and positioning the company for sustained earnings growth.

Read the complete narrative.

Want to know what underpins this bullish view? The main ingredients include aggressive international expansion, new asset classes, and bold profitability assumptions. Discover the narrative’s projections for outstanding future earnings and its take on Ares' unique fee-growth engine.

Result: Fair Value of $180.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition or regulatory changes affecting retail investor flows could quickly undermine Ares Management's anticipated fee growth and profit expansion.

Find out about the key risks to this Ares Management narrative.

Another View: Market Ratios Tell a Different Story

Looking at Ares Management through the lens of market price-to-earnings ratios, the picture shifts. The company trades at 89.4 times earnings, which is significantly above both the US Capital Markets industry average of 26.7 times and the peer average of just 13.8 times earnings. Even the fair ratio estimate sits at 26.8, far lower than Ares' current level. This wide gap may suggest heightened valuation risk and raises questions about whether the market is too optimistic about future growth or simply pricing in its unique business model. Should investors be wary of paying a premium, or does Ares truly deserve its lofty multiple?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Ares Management Narrative

If you have a different perspective or want to dig into the numbers on your own, you can put together a personalized view with just a few clicks. Do it your way.

A great starting point for your Ares Management research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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