ARES CAPITAL CORP (ARCC)
US04010L1035 - Common Stock
ARCC gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 218 industry peers in the Capital Markets industry. While ARCC is still in line with the averages on profitability rating, there are concerns on its financial health. ARCC has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year ARCC was profitable.
ARCC had a negative operating cash flow in the past year.
In the past 5 years ARCC has always been profitable.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
The Return On Assets of ARCC (5.82%) is better than 73.95% of its industry peers.
Looking at the Return On Equity, with a value of 12.35%, ARCC is in the better half of the industry, outperforming 66.51% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 4.38%, ARCC is in line with its industry, outperforming 53.95% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ARCC is below the industry average of 6.96%.
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
With an excellent Profit Margin value of 53.71%, ARCC belongs to the best of the industry, outperforming 90.23% of the companies in the same industry.
ARCC's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 49.63%, ARCC belongs to the best of the industry, outperforming 86.05% of the companies in the same industry.
In the last couple of years the Operating Margin of ARCC has declined.
Looking at the Gross Margin, with a value of 51.06%, ARCC is in line with its industry, outperforming 49.30% of the companies in the same industry.
ARCC's Gross Margin has been stable in the last couple of years.
| 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
Compared to 1 year ago, ARCC has more shares outstanding
ARCC has more shares outstanding than it did 5 years ago.
ARCC has a better debt/assets ratio than last year.
2.2 Solvency
ARCC has an Altman-Z score of 0.92. This is a bad value and indicates that ARCC is not financially healthy and even has some risk of bankruptcy.
ARCC has a Altman-Z score (0.92) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.06 is on the high side and indicates that ARCC has dependencies on debt financing.
The Debt to Equity ratio of ARCC (1.06) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.92 |
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.
A Quick Ratio of 1.09 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC's Quick ratio of 1.09 is in line compared to the rest of the industry. ARCC outperforms 49.30% of its industry peers.
| 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.
Measured over the past 5 years, ARCC shows a small growth in Earnings Per Share. The EPS has been growing by 7.12% on average per year.
ARCC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.35%.
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
ARCC is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -2.68% yearly.
The Revenue is expected to grow by 6.56% on average over the next years.
EPS Next Y1.86%
EPS Next 2Y-2.59%
EPS Next 3Y-2.68%
EPS Next 5YN/A
Revenue Next Year16.76%
Revenue Next 2Y9.88%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 9.12 indicates a reasonable valuation of ARCC.
ARCC's Price/Earnings ratio is a bit cheaper when compared to the industry. ARCC is cheaper than 74.42% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.96, ARCC is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 9.78, the valuation of ARCC can be described as reasonable.
70.70% of the companies in the same industry are more expensive than ARCC, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of ARCC to the average of the S&P500 Index (23.82), we can say ARCC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.12 | ||
| Fwd PE | 9.78 |
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.
A cheap valuation may be justified as ARCC's earnings are expected to decrease with -2.68% in the coming years.
PEG (NY)4.91
PEG (5Y)1.28
EPS Next 2Y-2.59%
EPS Next 3Y-2.68%
5. Dividend
5.1 Amount
ARCC has a Yearly Dividend Yield of 8.90%, which is a nice return.
ARCC's Dividend Yield is a higher than the industry average which is at 9.01.
ARCC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.23.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.9% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 3.99%.
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)3.99%
Div Incr Years3
Div Non Decr Years3
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-2.59%
EPS Next 3Y-2.68%
ARES CAPITAL CORP
NASDAQ:ARCC (11/22/2024, 12:17:01 PM)
21.985
+0.2 (+0.94%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap14.20B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.9% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
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Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.12 | ||
| Fwd PE | 9.78 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)4.91
PEG (5Y)1.28
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.82% | ||
| ROE | 12.35% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 49.63% | ||
| PM (TTM) | 53.71% | ||
| GM | 51.06% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.09 | ||
| Quick Ratio | 1.09 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)1.69%
EPS 3Y11.06%
EPS 5Y
EPS Q2Q%
EPS Next Y1.86%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)15.35%
Revenue growth 3Y20.05%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y