ARES MANAGEMENT CORP - A (ARES) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ARES - US03990B1017 - Common Stock
150.52 USD
+0.72 (+0.48%)
ARES gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 237 industry peers in the Capital Markets industry. ARES has a medium profitability rating, but doesn't score so well on its financial health evaluation. ARES is not priced too expensively while it is growing strongly. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
- In the past year ARES was profitable.
- ARES had a positive operating cash flow in the past year.
- In the past 5 years ARES has always been profitable.
- In the past 5 years ARES reported 4 times negative operating cash flow.
1.2 Ratios
- ARES has a Return On Assets (1.89%) which is comparable to the rest of the industry.
- With a decent Return On Equity value of 11.44%, ARES is doing good in the industry, outperforming 67.51% of the companies in the same industry.
- With a decent Return On Invested Capital value of 4.41%, ARES is doing good in the industry, outperforming 62.45% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for ARES is below the industry average of 7.27%.
- The last Return On Invested Capital (4.41%) for ARES is above the 3 year average (3.87%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.89% | ||
| ROE | 11.44% | ||
| ROIC | 4.41% |
ROA(3y)1.39%
ROA(5y)1.33%
ROE(3y)15.05%
ROE(5y)15.08%
ROIC(3y)3.87%
ROIC(5y)3.61%
1.3 Margins
- ARES has a worse Profit Margin (9.56%) than 65.40% of its industry peers.
- In the last couple of years the Profit Margin of ARES has grown nicely.
- ARES has a Operating Margin (19.56%) which is in line with its industry peers.
- ARES's Operating Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.56% | ||
| PM (TTM) | 9.56% | ||
| GM | N/A |
OM growth 3Y7.41%
OM growth 5Y8.32%
PM growth 3Y6.46%
PM growth 5Y9.3%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
- ARES has more shares outstanding than it did 1 year ago.
- ARES has more shares outstanding than it did 5 years ago.
- Compared to 1 year ago, ARES has an improved debt to assets ratio.
2.2 Solvency
- ARES has an Altman-Z score of 1.36. This is a bad value and indicates that ARES is not financially healthy and even has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 1.36, ARES is in the better half of the industry, outperforming 62.03% of the companies in the same industry.
- ARES has a debt to FCF ratio of 2.68. This is a good value and a sign of high solvency as ARES would need 2.68 years to pay back of all of its debts.
- The Debt to FCF ratio of ARES (2.68) is better than 80.17% of its industry peers.
- A Debt/Equity ratio of 2.69 is on the high side and indicates that ARES has dependencies on debt financing.
- ARES has a Debt to Equity ratio of 2.69. This is amonst the worse of the industry: ARES underperforms 81.01% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.69 | ||
| Debt/FCF | 2.68 | ||
| Altman-Z | 1.36 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
- ARES has a Current Ratio of 0.26. This is a bad value and indicates that ARES is not financially healthy enough and could expect problems in meeting its short term obligations.
- ARES has a worse Current ratio (0.26) than 83.97% of its industry peers.
- ARES has a Quick Ratio of 0.26. This is a bad value and indicates that ARES is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of ARES (0.26) is worse than 83.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.26 | ||
| Quick Ratio | 0.26 |
3. Growth
3.1 Past
- ARES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.94%, which is quite good.
- The Earnings Per Share has been growing by 18.77% on average over the past years. This is quite good.
- The Revenue has grown by 45.54% in the past year. This is a very strong growth!
- The Revenue has been growing by 17.09% on average over the past years. This is quite good.
EPS 1Y (TTM)14.94%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%25.26%
Revenue 1Y (TTM)45.54%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%0.64%
3.2 Future
- The Earnings Per Share is expected to grow by 20.69% on average over the next years. This is a very strong growth
- The Revenue is expected to grow by 20.07% on average over the next years. This is a very strong growth
EPS Next Y29.06%
EPS Next 2Y29.49%
EPS Next 3Y25.97%
EPS Next 5Y20.69%
Revenue Next Year28.41%
Revenue Next 2Y24.82%
Revenue Next 3Y22.55%
Revenue Next 5Y20.07%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same 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 stable.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 33.15, the valuation of ARES can be described as expensive.
- ARES's Price/Earnings ratio is a bit more expensive when compared to the industry. ARES is more expensive than 75.53% of the companies in the same industry.
- When comparing the Price/Earnings ratio of ARES to the average of the S&P500 Index (28.60), we can say ARES is valued inline with the index average.
- ARES is valuated rather expensively with a Price/Forward Earnings ratio of 22.61.
- ARES's Price/Forward Earnings ratio is in line with the industry average.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.83, ARES is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 33.15 | ||
| Fwd PE | 22.61 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ARES indicates a somewhat cheap valuation: ARES is cheaper than 62.03% of the companies listed in the same industry.
- 76.37% of the companies in the same industry are more expensive than ARES, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.95 | ||
| EV/EBITDA | 49.35 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- ARES's earnings are expected to grow with 25.97% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.14
PEG (5Y)1.77
EPS Next 2Y29.49%
EPS Next 3Y25.97%
5. Dividend
5.1 Amount
- ARES has a Yearly Dividend Yield of 2.77%.
- Compared to an average industry Dividend Yield of 5.87, ARES has a dividend in line with its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, ARES pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.77% |
5.2 History
- The dividend of ARES has a limited annual growth rate of 5.80%.
- ARES has been paying a dividend for at least 10 years, so it has a reliable track record.
- ARES has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)5.8%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
- 320.11% of the earnings are spent on dividend by ARES. This is not a sustainable payout ratio.
- ARES's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP320.11%
EPS Next 2Y29.49%
EPS Next 3Y25.97%
ARES MANAGEMENT CORP - A / ARES FAQ
What is the fundamental rating for ARES stock?
ChartMill assigns a fundamental rating of 5 / 10 to ARES.
Can you provide the valuation status for ARES MANAGEMENT CORP - A?
ChartMill assigns a valuation rating of 4 / 10 to ARES MANAGEMENT CORP - A (ARES). This can be considered as Fairly Valued.
What is the profitability of ARES stock?
ARES MANAGEMENT CORP - A (ARES) has a profitability rating of 4 / 10.
Can you provide the PE and PB ratios for ARES stock?
The Price/Earnings (PE) ratio for ARES MANAGEMENT CORP - A (ARES) is 33.15 and the Price/Book (PB) ratio is 11.
Can you provide the expected EPS growth for ARES stock?
The Earnings per Share (EPS) of ARES MANAGEMENT CORP - A (ARES) is expected to grow by 29.06% in the next year.