ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
NASDAQ:ARCC - Nasdaq - US04010L1035 - Common Stock - Currency: USD
Overall ARCC gets a fundamental rating of 4 out of 10. We evaluated ARCC against 223 industry peers in the Capital Markets industry. There are concerns on the financial health of ARCC while its profitability can be described as average. ARCC has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
ARCC had positive earnings in the past year.
In the past year ARCC has reported a negative cash flow from operations.
ARCC had positive earnings in each of the past 5 years.
ARCC had negative operating cash flow in 4 of the past 5 years.
1.2 Ratios
ARCC has a Return On Assets of 5.82%. This is in the better half of the industry: ARCC outperforms 75.69% of its industry peers.
ARCC has a Return On Equity of 12.35%. This is in the better half of the industry: ARCC outperforms 69.27% of its industry peers.
With a Return On Invested Capital value of 4.38%, ARCC perfoms like the industry average, outperforming 53.21% of the companies in the same industry.
ARCC had an Average Return On Invested Capital over the past 3 years of 3.86%. This is below the industry average of 6.74%.
The last Return On Invested Capital (4.38%) for ARCC is above the 3 year average (3.86%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.82% | ||
| ROE | 12.35% | ||
| ROIC | 4.38% |
ROA(3y)5.53%
ROA(5y)4.98%
ROE(3y)12.51%
ROE(5y)10.98%
ROIC(3y)3.86%
ROIC(5y)4.04%
1.3 Margins
The Profit Margin of ARCC (53.71%) is better than 92.20% of its industry peers.
In the last couple of years the Profit Margin of ARCC has declined.
ARCC has a better Operating Margin (49.63%) than 86.24% of its industry peers.
ARCC's Operating Margin has declined in the last couple of years.
ARCC's Gross Margin of 51.06% is in line compared to the rest of the industry. ARCC outperforms 51.38% of its industry peers.
In the last couple of years the Gross Margin of ARCC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 49.63% | ||
| PM (TTM) | 53.71% | ||
| GM | 51.06% |
OM growth 3Y-2.94%
OM growth 5Y-1.6%
PM growth 3Y22.04%
PM growth 5Y-1.93%
GM growth 3Y-3.38%
GM growth 5Y-1.02%
2. Health
2.1 Basic Checks
ARCC has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, ARCC has more shares outstanding
ARCC has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 0.97, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
ARCC has a Altman-Z score (0.97) which is comparable to the rest of the industry.
ARCC has a Debt/Equity ratio of 1.06. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.06, ARCC is in line with its industry, outperforming 49.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.97 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARCC has a Current Ratio of 1.09. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
ARCC has a Current ratio (1.09) which is comparable to the rest of the industry.
ARCC has a Quick Ratio of 1.09. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.09, ARCC is in line with its industry, outperforming 50.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 1.09 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 1.69% over the past year.
ARCC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.12% yearly.
The Revenue has grown by 15.35% in the past year. This is quite good.
ARCC shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.35% yearly.
EPS 1Y (TTM)1.69%
EPS 3Y11.06%
EPS 5Y7.12%
EPS Q2Q%-1.69%
Revenue 1Y (TTM)15.35%
Revenue growth 3Y20.05%
Revenue growth 5Y14.35%
Sales Q2Q%18.32%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -2.30% on average per year.
Based on estimates for the next years, ARCC will show a small growth in Revenue. The Revenue will grow by 6.56% on average per year.
EPS Next Y1.61%
EPS Next 2Y-2.48%
EPS Next 3Y-2.3%
EPS Next 5YN/A
Revenue Next Year16.69%
Revenue Next 2Y9.99%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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
A Price/Earnings ratio of 9.88 indicates a reasonable valuation of ARCC.
Compared to the rest of the industry, the Price/Earnings ratio of ARCC indicates a somewhat cheap valuation: ARCC is cheaper than 73.39% of the companies listed in the same industry.
ARCC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.47.
With a Price/Forward Earnings ratio of 10.56, the valuation of ARCC can be described as very reasonable.
Based on the Price/Forward Earnings ratio, ARCC is valued a bit cheaper than the industry average as 66.06% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 92.74, ARCC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.88 | ||
| Fwd PE | 10.56 |
4.2 Price Multiples
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ARCC does not grow enough to justify the current Price/Earnings ratio.
ARCC's earnings are expected to decrease with -2.30% in the coming years. This may justify a cheaper valuation.
PEG (NY)6.15
PEG (5Y)1.39
EPS Next 2Y-2.48%
EPS Next 3Y-2.3%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 8.20%, ARCC is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 9.39, ARCC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.28, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.2% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 3.99%.
ARCC has been paying a dividend for at least 10 years, so it has a reliable track record.
ARCC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)3.99%
Div Incr Years3
Div Non Decr Years4
5.3 Sustainability
ARCC pays out 69.65% of its income as dividend. 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.
DP69.65%
EPS Next 2Y-2.48%
EPS Next 3Y-2.3%
ARES CAPITAL CORP
NASDAQ:ARCC (2/4/2025, 8:27:04 PM)
After market: 23.77 -0.04 (-0.17%)23.81
+0.01 (+0.04%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners29.57%
Inst Owner Change0.15%
Ins Owners0.53%
Ins Owner Change0%
Market Cap15.38B
Analysts84
Price Target23.1 (-2.98%)
Short Float %2.81%
Short Ratio3.9
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.2% |
Yearly Dividend1.87
Dividend Growth(5Y)3.99%
DP69.65%
Div Incr Years3
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.79%
Min EPS beat(2)-4.43%
Max EPS beat(2)2.86%
EPS beat(4)2
Avg EPS beat(4)-0.35%
Min EPS beat(4)-4.43%
Max EPS beat(4)3.13%
EPS beat(8)4
Avg EPS beat(8)0.38%
EPS beat(12)6
Avg EPS beat(12)0.79%
EPS beat(16)9
Avg EPS beat(16)4.1%
Revenue beat(2)1
Avg Revenue beat(2)0.81%
Min Revenue beat(2)-1.87%
Max Revenue beat(2)3.48%
Revenue beat(4)2
Avg Revenue beat(4)2.95%
Min Revenue beat(4)-1.87%
Max Revenue beat(4)12.03%
Revenue beat(8)3
Avg Revenue beat(8)1.91%
Revenue beat(12)6
Avg Revenue beat(12)1.77%
Revenue beat(16)9
Avg Revenue beat(16)3.65%
PT rev (1m)0%
PT rev (3m)2.39%
EPS NQ rev (1m)-0.12%
EPS NQ rev (3m)-1.86%
EPS NY rev (1m)-0.07%
EPS NY rev (3m)-1.08%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)11.17%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.23%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.88 | ||
| Fwd PE | 10.56 | ||
| P/S | 5.24 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.2 | ||
| P/tB | 1.2 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.41
EY10.12%
EPS(NY)2.25
Fwd EY9.47%
FCF(TTM)-3.43
FCFYN/A
OCF(TTM)-3.43
OCFYN/A
SpS4.55
BVpS19.77
TBVpS19.77
PEG (NY)6.15
PEG (5Y)1.39
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.82% | ||
| ROE | 12.35% | ||
| ROCE | 5.54% | ||
| ROIC | 4.38% | ||
| ROICexc | 4.46% | ||
| ROICexgc | 4.49% | ||
| OM | 49.63% | ||
| PM (TTM) | 53.71% | ||
| GM | 51.06% | ||
| FCFM | N/A |
ROA(3y)5.53%
ROA(5y)4.98%
ROE(3y)12.51%
ROE(5y)10.98%
ROIC(3y)3.86%
ROIC(5y)4.04%
ROICexc(3y)3.94%
ROICexc(5y)4.11%
ROICexgc(3y)3.95%
ROICexgc(5y)4.13%
ROCE(3y)4.89%
ROCE(5y)5.12%
ROICexcg growth 3Y2.51%
ROICexcg growth 5Y-0.54%
ROICexc growth 3Y2.58%
ROICexc growth 5Y-0.49%
OM growth 3Y-2.94%
OM growth 5Y-1.6%
PM growth 3Y22.04%
PM growth 5Y-1.93%
GM growth 3Y-3.38%
GM growth 5Y-1.02%
F-Score3
Asset Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.31 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 1.09 | ||
| Altman-Z | 0.97 |
F-Score3
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)1.69%
EPS 3Y11.06%
EPS 5Y7.12%
EPS Q2Q%-1.69%
EPS Next Y1.61%
EPS Next 2Y-2.48%
EPS Next 3Y-2.3%
EPS Next 5YN/A
Revenue 1Y (TTM)15.35%
Revenue growth 3Y20.05%
Revenue growth 5Y14.35%
Sales Q2Q%18.32%
Revenue Next Year16.69%
Revenue Next 2Y9.99%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
EBIT growth 1Y12.24%
EBIT growth 3Y16.52%
EBIT growth 5Y12.52%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y19.78%
FCF growth 3YN/A
FCF growth 5Y10.95%
OCF growth 1Y19.78%
OCF growth 3YN/A
OCF growth 5Y10.95%