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. ARCC has a medium profitability rating, but doesn't score so well on its financial health evaluation. 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.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
ARCC has a Return On Assets of 5.39%. This is in the better half of the industry: ARCC outperforms 69.33% of its industry peers.
ARCC's Return On Equity of 11.40% is fine compared to the rest of the industry. ARCC outperforms 60.44% of its industry peers.
ARCC has a Return On Invested Capital (4.30%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for ARCC is below the industry average of 7.05%.
The last Return On Invested Capital (4.30%) for ARCC is above the 3 year average (4.28%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.39% | ||
| ROE | 11.4% | ||
| ROIC | 4.3% |
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 50.90%. This is amongst the best in the industry. ARCC outperforms 87.56% of its industry peers.
In the last couple of years the Profit Margin of ARCC has remained more or less at the same level.
The Operating Margin of ARCC (49.36%) is better than 87.56% of its industry peers.
ARCC's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 50.80%, ARCC is in line with its industry, outperforming 58.22% of the companies in the same industry.
In the last couple of years the Gross Margin of ARCC has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 49.36% | ||
| PM (TTM) | 50.9% | ||
| GM | 50.8% |
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
Compared to 1 year ago, ARCC has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.94, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
ARCC has a Altman-Z score (0.94) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.03 is on the high side and indicates that ARCC has dependencies on debt financing.
ARCC has a Debt to Equity ratio of 1.03. This is comparable to the rest of the industry: ARCC outperforms 53.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.03 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.94 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARCC has a Current Ratio of 1.01. 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 (1.01) is comparable to the rest of the industry.
A Quick Ratio of 1.01 indicates that ARCC should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.01, ARCC perfoms like the industry average, outperforming 46.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
ARCC shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -1.69%.
The Earnings Per Share has been growing slightly by 4.06% on average over the past years.
The Revenue has grown by 14.38% 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)-1.69%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-12.7%
Revenue 1Y (TTM)14.38%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%-2.06%
3.2 Future
The Earnings Per Share is expected to decrease by -2.61% on average over the next years.
The Revenue is expected to grow by 10.95% on average over the next years. This is quite good.
EPS Next Y-4.49%
EPS Next 2Y-3.33%
EPS Next 3Y-2.61%
EPS Next 5YN/A
Revenue Next Year8.79%
Revenue Next 2Y7.92%
Revenue Next 3Y10.95%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 9.88 indicates a reasonable valuation of ARCC.
ARCC's Price/Earnings ratio is a bit cheaper when compared to the industry. ARCC is cheaper than 70.22% of the companies in the same industry.
ARCC is valuated cheaply when we compare the Price/Earnings ratio to 29.35, which is the current average of the S&P500 Index.
ARCC is valuated reasonably with a Price/Forward Earnings ratio of 10.34.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ARCC indicates a somewhat cheap valuation: ARCC is cheaper than 66.22% of the companies listed in the same industry.
ARCC's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.10.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.88 | ||
| Fwd PE | 10.34 |
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 -2.61% in the coming years.
PEG (NY)N/A
PEG (5Y)2.44
EPS Next 2Y-3.33%
EPS Next 3Y-2.61%
5. Dividend
5.1 Amount
ARCC has a Yearly Dividend Yield of 8.60%, which is a nice return.
Compared to an average industry Dividend Yield of 8.65, ARCC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.33, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.6% |
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 Years3
Div Non Decr Years4
5.3 Sustainability
ARCC pays out 74.84% 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.
DP74.84%
EPS Next 2Y-3.33%
EPS Next 3Y-2.61%
23.01
+0.68 (+3.05%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners30.49%
Inst Owner Change10.45%
Ins Owners0.49%
Ins Owner Change-7.9%
Market Cap15.45B
Analysts83
Price Target23.72 (3.09%)
Short Float %2.61%
Short Ratio3.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.6% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP74.84%
Div Incr Years3
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-5.56%
Min EPS beat(2)-6.69%
Max EPS beat(2)-4.43%
EPS beat(4)1
Avg EPS beat(4)-2.8%
Min EPS beat(4)-6.69%
Max EPS beat(4)2.86%
EPS beat(8)3
Avg EPS beat(8)-1.67%
EPS beat(12)5
Avg EPS beat(12)-1.13%
EPS beat(16)8
Avg EPS beat(16)1.72%
Revenue beat(2)0
Avg Revenue beat(2)-3.56%
Min Revenue beat(2)-5.25%
Max Revenue beat(2)-1.87%
Revenue beat(4)1
Avg Revenue beat(4)-1.37%
Min Revenue beat(4)-5.25%
Max Revenue beat(4)3.48%
Revenue beat(8)2
Avg Revenue beat(8)0.12%
Revenue beat(12)5
Avg Revenue beat(12)0.25%
Revenue beat(16)8
Avg Revenue beat(16)2.05%
PT rev (1m)2.68%
PT rev (3m)3.5%
EPS NQ rev (1m)-3.13%
EPS NQ rev (3m)-3.13%
EPS NY rev (1m)-1.26%
EPS NY rev (3m)-1.04%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)-0.01%
Revenue NY rev (1m)4.88%
Revenue NY rev (3m)2.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.88 | ||
| Fwd PE | 10.34 | ||
| P/S | 5.17 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.16 | ||
| P/tB | 1.16 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.33
EY10.13%
EPS(NY)2.23
Fwd EY9.67%
FCF(TTM)-3.17
FCFYN/A
OCF(TTM)-3.17
OCFYN/A
SpS4.45
BVpS19.89
TBVpS19.89
PEG (NY)N/A
PEG (5Y)2.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.39% | ||
| ROE | 11.4% | ||
| ROCE | 5.44% | ||
| ROIC | 4.3% | ||
| ROICexc | 4.4% | ||
| ROICexgc | 4.43% | ||
| OM | 49.36% | ||
| PM (TTM) | 50.9% | ||
| GM | 50.8% | ||
| 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 | 1.03 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.18 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z | 0.94 |
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)-1.69%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-12.7%
EPS Next Y-4.49%
EPS Next 2Y-3.33%
EPS Next 3Y-2.61%
EPS Next 5YN/A
Revenue 1Y (TTM)14.38%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%-2.06%
Revenue Next Year8.79%
Revenue Next 2Y7.92%
Revenue Next 3Y10.95%
Revenue Next 5YN/A
EBIT growth 1Y14.77%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-516.44%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-516.44%
OCF growth 3YN/A
OCF growth 5YN/A