ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
USA - NASDAQ:ARCC - US04010L1035 - Common Stock
20.38 USD
+0.11 (+0.54%)
20.35 USD
-0.03 (-0.15%)
We assign a fundamental rating of 4 out of 10 to ARCC. ARCC was compared to 237 industry peers in the Capital Markets industry. ARCC has an average financial health and profitability rating. ARCC has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
ARCC had positive earnings in the past year.
ARCC had a negative operating cash flow in the past year.
In the past 5 years ARCC has always been profitable.
ARCC had negative operating cash flow in 4 of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 4.42%, ARCC is doing good in the industry, outperforming 65.40% of the companies in the same industry.
Looking at the Return On Equity, with a value of 9.52%, ARCC is in line with its industry, outperforming 53.59% of the companies in the same industry.
ARCC has a Return On Invested Capital (3.79%) which is in line with its industry peers.
ARCC had an Average Return On Invested Capital over the past 3 years of 4.28%. This is below the industry average of 7.63%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.42% | ||
| ROE | 9.52% | ||
| ROIC | 3.79% |
ROA(3y)4.82%
ROA(5y)4.99%
ROE(3y)10.42%
ROE(5y)11.14%
ROIC(3y)4.28%
ROIC(5y)4%
1.3 Margins
ARCC has a Profit Margin of 45.16%. This is amongst the best in the industry. ARCC outperforms 87.76% of its industry peers.
In the last couple of years the Profit Margin of ARCC has remained more or less at the same level.
With an excellent Operating Margin value of 47.81%, ARCC belongs to the best of the industry, outperforming 83.12% of the companies in the same industry.
In the last couple of years the Operating Margin of ARCC has declined.
The Gross Margin of ARCC (49.47%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of ARCC has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 47.81% | ||
| PM (TTM) | 45.16% | ||
| GM | 49.47% |
OM growth 3Y5.28%
OM growth 5Y-1.82%
PM growth 3Y-16.07%
PM growth 5Y-0.39%
GM growth 3Y4.55%
GM growth 5Y-1.61%
2. Health
2.1 Basic Checks
The number of shares outstanding for ARCC has been increased compared to 1 year ago.
Compared to 5 years ago, ARCC has more shares outstanding
The debt/assets ratio for ARCC has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 0.85, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
ARCC has a Altman-Z score of 0.85. This is comparable to the rest of the industry: ARCC outperforms 47.68% of its industry peers.
A Debt/Equity ratio of 1.09 is on the high side and indicates that ARCC has dependencies on debt financing.
ARCC has a Debt to Equity ratio (1.09) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.85 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARCC has a Current Ratio of 2.23. This indicates that ARCC is financially healthy and has no problem in meeting its short term obligations.
ARCC has a Current ratio of 2.23. This is in the better half of the industry: ARCC outperforms 74.68% of its industry peers.
A Quick Ratio of 2.23 indicates that ARCC has no problem at all paying its short term obligations.
With a decent Quick ratio value of 2.23, ARCC is doing good in the industry, outperforming 74.68% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 |
3. Growth
3.1 Past
ARCC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -14.94%.
ARCC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 4.06% yearly.
The Revenue has been growing slightly by 2.72% in the past year.
The Revenue has been growing by 14.37% on average over the past years. This is quite good.
EPS 1Y (TTM)-14.94%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-13.79%
Revenue 1Y (TTM)2.72%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%18.71%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -5.46% on average per year.
The Revenue is expected to grow by 3.59% on average over the next years.
EPS Next Y-12.04%
EPS Next 2Y-7.38%
EPS Next 3Y-5.46%
EPS Next 5YN/A
Revenue Next Year0.75%
Revenue Next 2Y2.9%
Revenue Next 3Y3.59%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 9.94, the valuation of ARCC can be described as very reasonable.
Based on the Price/Earnings ratio, ARCC is valued a bit cheaper than 70.89% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.13. ARCC is valued rather cheaply when compared to this.
ARCC is valuated reasonably with a Price/Forward Earnings ratio of 10.20.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ARCC indicates a somewhat cheap valuation: ARCC is cheaper than 68.78% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.35. ARCC is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.94 | ||
| Fwd PE | 10.2 |
4.2 Price Multiples
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
ARCC's earnings are expected to decrease with -5.46% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.45
EPS Next 2Y-7.38%
EPS Next 3Y-5.46%
5. Dividend
5.1 Amount
ARCC has a Yearly Dividend Yield of 9.47%, which is a nice return.
Compared to an average industry Dividend Yield of 8.57, ARCC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.39, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.47% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 2.32%.
ARCC has paid a dividend for at least 10 years, which is a reliable track record.
ARCC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)2.32%
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
91.56% of the earnings are spent on dividend by ARCC. This is not a sustainable payout ratio.
ARCC's earnings are declining while the Dividend Rate has been growing. This means the dividend growth is most likely not sustainable.
DP91.56%
EPS Next 2Y-7.38%
EPS Next 3Y-5.46%
20.38
+0.11 (+0.54%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners32.38%
Inst Owner Change-17.04%
Ins Owners0.47%
Ins Owner Change0%
Market Cap14.38B
Revenue(TTM)3.02B
Net Income(TTM)1.36B
Analysts83.81
Price Target23.5 (15.31%)
Short Float %2.14%
Short Ratio2.83
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.47% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP91.56%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.82%
Min EPS beat(2)-3.22%
Max EPS beat(2)-2.41%
EPS beat(4)0
Avg EPS beat(4)-5.28%
Min EPS beat(4)-8.8%
Max EPS beat(4)-2.41%
EPS beat(8)2
Avg EPS beat(8)-2.81%
EPS beat(12)4
Avg EPS beat(12)-1.5%
EPS beat(16)6
Avg EPS beat(16)-0.73%
Revenue beat(2)1
Avg Revenue beat(2)7.14%
Min Revenue beat(2)-3.06%
Max Revenue beat(2)17.35%
Revenue beat(4)1
Avg Revenue beat(4)0.35%
Min Revenue beat(4)-7.65%
Max Revenue beat(4)17.35%
Revenue beat(8)3
Avg Revenue beat(8)1.65%
Revenue beat(12)4
Avg Revenue beat(12)1.39%
Revenue beat(16)7
Avg Revenue beat(16)1.41%
PT rev (1m)-1.1%
PT rev (3m)0.55%
EPS NQ rev (1m)0.15%
EPS NQ rev (3m)0.09%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)-0.99%
Revenue NQ rev (1m)0.15%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.36%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.94 | ||
| Fwd PE | 10.2 | ||
| P/S | 4.76 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1 | ||
| P/tB | 1 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.05
EY10.06%
EPS(NY)2
Fwd EY9.81%
FCF(TTM)-2.21
FCFYN/A
OCF(TTM)-2.21
OCFYN/A
SpS4.28
BVpS20.3
TBVpS20.3
PEG (NY)N/A
PEG (5Y)2.45
Graham Number30.6
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.42% | ||
| ROE | 9.52% | ||
| ROCE | 4.8% | ||
| ROIC | 3.79% | ||
| ROICexc | 3.93% | ||
| ROICexgc | 3.96% | ||
| OM | 47.81% | ||
| PM (TTM) | 45.16% | ||
| GM | 49.47% | ||
| FCFM | N/A |
ROA(3y)4.82%
ROA(5y)4.99%
ROE(3y)10.42%
ROE(5y)11.14%
ROIC(3y)4.28%
ROIC(5y)4%
ROICexc(3y)4.37%
ROICexc(5y)4.08%
ROICexgc(3y)4.39%
ROICexgc(5y)4.1%
ROCE(3y)5.42%
ROCE(5y)5.06%
ROICexgc growth 3Y12.39%
ROICexgc growth 5Y-0.77%
ROICexc growth 3Y12.35%
ROICexc growth 5Y-0.78%
OM growth 3Y5.28%
OM growth 5Y-1.82%
PM growth 3Y-16.07%
PM growth 5Y-0.39%
GM growth 3Y4.55%
GM growth 5Y-1.61%
F-Score2
Asset Turnover0.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 2.23 | ||
| Quick Ratio | 2.23 | ||
| Altman-Z | 0.85 |
F-Score2
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-14.94%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-13.79%
EPS Next Y-12.04%
EPS Next 2Y-7.38%
EPS Next 3Y-5.46%
EPS Next 5YN/A
Revenue 1Y (TTM)2.72%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%18.71%
Revenue Next Year0.75%
Revenue Next 2Y2.9%
Revenue Next 3Y3.59%
Revenue Next 5YN/A
EBIT growth 1Y-1.03%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-405.49%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-405.49%
OCF growth 3YN/A
OCF growth 5YN/A
ARES CAPITAL CORP / ARCC FAQ
What is the fundamental rating for ARCC stock?
ChartMill assigns a fundamental rating of 4 / 10 to ARCC.
What is the valuation status of ARES CAPITAL CORP (ARCC) stock?
ChartMill assigns a valuation rating of 4 / 10 to ARES CAPITAL CORP (ARCC). This can be considered as Fairly Valued.
Can you provide the profitability details for ARES CAPITAL CORP?
ARES CAPITAL CORP (ARCC) has a profitability rating of 4 / 10.
Can you provide the PE and PB ratios for ARCC stock?
The Price/Earnings (PE) ratio for ARES CAPITAL CORP (ARCC) is 9.94 and the Price/Book (PB) ratio is 1.
What is the expected EPS growth for ARES CAPITAL CORP (ARCC) stock?
The Earnings per Share (EPS) of ARES CAPITAL CORP (ARCC) is expected to decline by -12.04% in the next year.