ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
USA - NASDAQ:ARCC - US04010L1035 - Common Stock
21.09 USD
-0.07 (-0.33%)
21.13 USD
+0.04 (+0.19%)
Taking everything into account, ARCC scores 3 out of 10 in our fundamental rating. ARCC was compared to 237 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 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.
Each year in the past 5 years ARCC has been profitable.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
ARCC's Return On Assets of 4.65% is fine compared to the rest of the industry. ARCC outperforms 67.09% of its industry peers.
ARCC's Return On Equity of 9.64% is in line compared to the rest of the industry. ARCC outperforms 55.27% of its industry peers.
With a Return On Invested Capital value of 4.09%, ARCC perfoms like the industry average, outperforming 55.27% of the companies in the same industry.
ARCC had an Average Return On Invested Capital over the past 3 years of 4.28%. This is below the industry average of 7.61%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.65% | ||
| ROE | 9.64% | ||
| ROIC | 4.09% |
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 44.94%, ARCC belongs to the top of the industry, outperforming 87.76% of the companies in the same industry.
ARCC's Profit Margin has been stable in the last couple of years.
ARCC's Operating Margin of 48.72% is amongst the best of the industry. ARCC outperforms 82.28% of its industry peers.
ARCC's Operating Margin has declined in the last couple of years.
ARCC has a Gross Margin (50.28%) which is in line with its industry peers.
In the last couple of years the Gross Margin of ARCC has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 48.72% | ||
| PM (TTM) | 44.94% | ||
| GM | 50.28% |
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.
The number of shares outstanding for ARCC has been increased compared to 5 years ago.
The debt/assets ratio for ARCC has been reduced compared to a year ago.
2.2 Solvency
ARCC has an Altman-Z score of 0.91. This is a bad value and indicates that ARCC is not financially healthy and even has some risk of bankruptcy.
ARCC's Altman-Z score of 0.91 is in line compared to the rest of the industry. ARCC outperforms 51.05% of its industry peers.
A Debt/Equity ratio of 1.01 is on the high side and indicates that ARCC has dependencies on debt financing.
ARCC has a Debt to Equity ratio of 1.01. This is comparable to the rest of the industry: ARCC outperforms 50.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.01 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.91 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 1.07 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC has a Current ratio (1.07) which is in line with its industry peers.
ARCC has a Quick Ratio of 1.07. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
ARCC's Quick ratio of 1.07 is in line compared to the rest of the industry. ARCC outperforms 48.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.07 | ||
| Quick Ratio | 1.07 |
3. Growth
3.1 Past
ARCC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -11.98%.
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.
ARCC shows a small growth in Revenue. In the last year, the Revenue has grown by 6.85%.
The Revenue has been growing by 14.37% on average over the past years. This is quite good.
EPS 1Y (TTM)-11.98%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-18.03%
Revenue 1Y (TTM)6.85%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%7.02%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -5.50% on average per year.
ARCC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.64% yearly.
EPS Next Y-11.9%
EPS Next 2Y-7.03%
EPS Next 3Y-5.5%
EPS Next 5YN/A
Revenue Next Year0.29%
Revenue Next 2Y2.66%
Revenue Next 3Y4.64%
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
A Price/Earnings ratio of 9.90 indicates a reasonable valuation of ARCC.
Based on the Price/Earnings ratio, ARCC is valued a bit cheaper than 73.42% of the companies in the same industry.
When comparing the Price/Earnings ratio of ARCC to the average of the S&P500 Index (27.20), we can say ARCC is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 10.47, the valuation of ARCC can be described as reasonable.
Based on the Price/Forward Earnings ratio, ARCC is valued a bit cheaper than the industry average as 69.20% of the companies are valued more expensively.
ARCC is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.71, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.9 | ||
| Fwd PE | 10.47 |
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 -5.50% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.44
EPS Next 2Y-7.03%
EPS Next 3Y-5.5%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 8.57%, ARCC is a good candidate for dividend investing.
ARCC's Dividend Yield is a higher than the industry average which is at 7.96.
ARCC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.57% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 2.32%.
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)2.32%
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
89.80% 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.
DP89.8%
EPS Next 2Y-7.03%
EPS Next 3Y-5.5%
21.09
-0.07 (-0.33%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners31.31%
Inst Owner Change21.6%
Ins Owners0.47%
Ins Owner Change0%
Market Cap14.88B
Analysts84
Price Target23.76 (12.66%)
Short Float %2.35%
Short Ratio4.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.57% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP89.8%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-6.01%
Min EPS beat(2)-8.8%
Max EPS beat(2)-3.22%
EPS beat(4)0
Avg EPS beat(4)-5.78%
Min EPS beat(4)-8.8%
Max EPS beat(4)-3.22%
EPS beat(8)2
Avg EPS beat(8)-2.59%
EPS beat(12)4
Avg EPS beat(12)-1.36%
EPS beat(16)7
Avg EPS beat(16)-0.34%
Revenue beat(2)1
Avg Revenue beat(2)-1.26%
Min Revenue beat(2)-7.65%
Max Revenue beat(2)5.13%
Revenue beat(4)1
Avg Revenue beat(4)-2.41%
Min Revenue beat(4)-7.65%
Max Revenue beat(4)5.13%
Revenue beat(8)3
Avg Revenue beat(8)0.29%
Revenue beat(12)5
Avg Revenue beat(12)0.84%
Revenue beat(16)8
Avg Revenue beat(16)0.93%
PT rev (1m)0.18%
PT rev (3m)2.89%
EPS NQ rev (1m)-0.28%
EPS NQ rev (3m)-1.11%
EPS NY rev (1m)-0.94%
EPS NY rev (3m)-2.52%
Revenue NQ rev (1m)-0.11%
Revenue NQ rev (3m)1.01%
Revenue NY rev (1m)0.36%
Revenue NY rev (3m)0.36%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.9 | ||
| Fwd PE | 10.47 | ||
| P/S | 4.94 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.06 | ||
| P/tB | 1.06 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.13
EY10.1%
EPS(NY)2.01
Fwd EY9.55%
FCF(TTM)-1.85
FCFYN/A
OCF(TTM)-1.85
OCFYN/A
SpS4.27
BVpS19.9
TBVpS19.9
PEG (NY)N/A
PEG (5Y)2.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.65% | ||
| ROE | 9.64% | ||
| ROCE | 5.17% | ||
| ROIC | 4.09% | ||
| ROICexc | 4.15% | ||
| ROICexgc | 4.18% | ||
| OM | 48.72% | ||
| PM (TTM) | 44.94% | ||
| GM | 50.28% | ||
| 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 Turnover0.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.01 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.02 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.07 | ||
| Quick Ratio | 1.07 | ||
| Altman-Z | 0.91 |
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)-11.98%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-18.03%
EPS Next Y-11.9%
EPS Next 2Y-7.03%
EPS Next 3Y-5.5%
EPS Next 5YN/A
Revenue 1Y (TTM)6.85%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%7.02%
Revenue Next Year0.29%
Revenue Next 2Y2.66%
Revenue Next 3Y4.64%
Revenue Next 5YN/A
EBIT growth 1Y6.54%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-369.83%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-369.83%
OCF growth 3YN/A
OCF growth 5YN/A