ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
NASDAQ:ARCC - Nasdaq - US04010L1035 - Common Stock - Currency: USD
Taking everything into account, ARCC scores 4 out of 10 in our fundamental rating. ARCC was compared to 233 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 valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
In the past year ARCC was profitable.
In the past year ARCC has reported a negative cash flow from operations.
ARCC had positive earnings in each of the past 5 years.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 4.64%, ARCC is doing good in the industry, outperforming 66.52% of the companies in the same industry.
ARCC has a Return On Equity (9.61%) which is in line with its industry peers.
ARCC has a Return On Invested Capital (4.34%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for ARCC is below the industry average of 7.84%.
The 3 year average ROIC (4.28%) for ARCC is below the current ROIC(4.34%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.64% | ||
| ROE | 9.61% | ||
| ROIC | 4.34% |
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
Looking at the Profit Margin, with a value of 43.50%, ARCC belongs to the top of the industry, outperforming 87.55% of the companies in the same industry.
In the last couple of years the Profit Margin of ARCC has remained more or less at the same level.
ARCC's Operating Margin of 50.18% is amongst the best of the industry. ARCC outperforms 85.41% of its industry peers.
ARCC's Operating Margin has declined in the last couple of years.
ARCC has a Gross Margin (51.67%) which is comparable to the rest of the industry.
ARCC's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 50.18% | ||
| PM (TTM) | 43.5% | ||
| GM | 51.67% |
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.
ARCC has more shares outstanding than it did 5 years ago.
ARCC has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 0.95, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.95, ARCC is in line with its industry, outperforming 50.21% of the companies in the same industry.
ARCC has a Debt/Equity ratio of 1.02. This is a high value indicating a heavy dependency on external financing.
ARCC has a Debt to Equity ratio of 1.02. This is comparable to the rest of the industry: ARCC outperforms 48.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.02 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.95 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARCC has a Current Ratio of 1.27. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of ARCC (1.27) is comparable to the rest of the industry.
ARCC has a Quick Ratio of 1.27. 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 Quick ratio of 1.27. This is comparable to the rest of the industry: ARCC outperforms 54.51% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 |
3. Growth
3.1 Past
The earnings per share for ARCC have decreased by -6.28% in the last year.
Measured over the past 5 years, ARCC shows a small growth in Earnings Per Share. The EPS has been growing by 4.06% on average per year.
The Revenue has grown by 12.01% in the past year. This is quite good.
The Revenue has been growing by 14.37% on average over the past years. This is quite good.
EPS 1Y (TTM)-6.28%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-15.25%
Revenue 1Y (TTM)12.01%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -4.81% on average per year.
ARCC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.01% yearly.
EPS Next Y-11.06%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
EPS Next 5YN/A
Revenue Next Year-0.06%
Revenue Next 2Y2.76%
Revenue Next 3Y4.01%
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.
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
The Price/Earnings ratio is 9.84, which indicates a very decent 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 74.68% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of ARCC to the average of the S&P500 Index (27.21), we can say ARCC is valued rather cheaply.
With a Price/Forward Earnings ratio of 10.86, the valuation of ARCC can be described as very reasonable.
Based on the Price/Forward Earnings ratio, ARCC is valued a bit cheaper than 67.38% of the companies in the same industry.
ARCC is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.70, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.84 | ||
| Fwd PE | 10.86 |
4.2 Price Multiples
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
A cheap valuation may be justified as ARCC's earnings are expected to decrease with -4.81% in the coming years.
PEG (NY)N/A
PEG (5Y)2.43
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 8.83%, ARCC is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 8.00, ARCC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.42, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.83% |
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
89.57% 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.
DP89.57%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
22.05
+0.09 (+0.41%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners32.03%
Inst Owner Change8.17%
Ins Owners0.48%
Ins Owner Change-7.9%
Market Cap15.31B
Analysts83
Price Target23.23 (5.35%)
Short Float %2.63%
Short Ratio4.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.83% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP89.57%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-7.74%
Min EPS beat(2)-8.8%
Max EPS beat(2)-6.69%
EPS beat(4)1
Avg EPS beat(4)-4.27%
Min EPS beat(4)-8.8%
Max EPS beat(4)2.86%
EPS beat(8)3
Avg EPS beat(8)-2.17%
EPS beat(12)5
Avg EPS beat(12)-0.91%
EPS beat(16)8
Avg EPS beat(16)1.21%
Revenue beat(2)0
Avg Revenue beat(2)-6.45%
Min Revenue beat(2)-7.65%
Max Revenue beat(2)-5.25%
Revenue beat(4)1
Avg Revenue beat(4)-2.82%
Min Revenue beat(4)-7.65%
Max Revenue beat(4)3.48%
Revenue beat(8)2
Avg Revenue beat(8)-0.36%
Revenue beat(12)5
Avg Revenue beat(12)0.51%
Revenue beat(16)8
Avg Revenue beat(16)1.62%
PT rev (1m)0.6%
PT rev (3m)-2.05%
EPS NQ rev (1m)-1.41%
EPS NQ rev (3m)-6.44%
EPS NY rev (1m)-1.59%
EPS NY rev (3m)-6.23%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-5.26%
Revenue NY rev (1m)-2.72%
Revenue NY rev (3m)-5.93%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.84 | ||
| Fwd PE | 10.86 | ||
| P/S | 5.07 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.12 | ||
| P/tB | 1.12 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.24
EY10.16%
EPS(NY)2.03
Fwd EY9.2%
FCF(TTM)-3.47
FCFYN/A
OCF(TTM)-3.47
OCFYN/A
SpS4.35
BVpS19.7
TBVpS19.7
PEG (NY)N/A
PEG (5Y)2.43
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.64% | ||
| ROE | 9.61% | ||
| ROCE | 5.49% | ||
| ROIC | 4.34% | ||
| ROICexc | 4.44% | ||
| ROICexgc | 4.47% | ||
| OM | 50.18% | ||
| PM (TTM) | 43.5% | ||
| GM | 51.67% | ||
| 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%
ROICexcg growth 3Y12.39%
ROICexcg 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 Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.02 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.24 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 | ||
| Altman-Z | 0.95 |
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)-6.28%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-15.25%
EPS Next Y-11.06%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
EPS Next 5YN/A
Revenue 1Y (TTM)12.01%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
Revenue Next Year-0.06%
Revenue Next 2Y2.76%
Revenue Next 3Y4.01%
Revenue Next 5YN/A
EBIT growth 1Y16.8%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-148.55%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-148.55%
OCF growth 3YN/A
OCF growth 5YN/A