ARES MANAGEMENT CORP - A (ARES) Stock Fundamental Analysis
NYSE:ARES - New York Stock Exchange, Inc. - US03990B1017 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to ARES. ARES was compared to 233 industry peers in the Capital Markets industry. Both the profitability and financial health of ARES have multiple concerns. ARES shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
In the past year ARES was profitable.
In the past year ARES had a positive cash flow from operations.
Each year in the past 5 years ARES has been profitable.
In the past 5 years ARES reported 4 times negative operating cash flow.
1.2 Ratios
ARES's Return On Assets of 1.31% is on the low side compared to the rest of the industry. ARES is outperformed by 60.09% of its industry peers.
With a Return On Equity value of 7.98%, ARES perfoms like the industry average, outperforming 49.36% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 3.71%, ARES is in line with its industry, outperforming 47.21% 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 7.84%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.31% | ||
| ROE | 7.98% | ||
| ROIC | 3.71% |
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 (8.33%) than 63.95% of its industry peers.
In the last couple of years the Profit Margin of ARES has grown nicely.
ARES's Operating Margin of 21.45% is in line compared to the rest of the industry. ARES outperforms 43.35% of its industry peers.
ARES's Operating Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.45% | ||
| PM (TTM) | 8.33% | ||
| 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
Compared to 1 year ago, ARES has more shares outstanding
Compared to 5 years ago, ARES has more shares outstanding
ARES has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.60, we must say that ARES is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.60, ARES is in the better half of the industry, outperforming 65.24% of the companies in the same industry.
The Debt to FCF ratio of ARES is 3.18, which is a good value as it means it would take ARES, 3.18 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 3.18, ARES is doing good in the industry, outperforming 75.11% of the companies in the same industry.
A Debt/Equity ratio of 2.84 is on the high side and indicates that ARES has dependencies on debt financing.
ARES has a Debt to Equity ratio of 2.84. This is amonst the worse of the industry: ARES underperforms 82.40% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.84 | ||
| Debt/FCF | 3.18 | ||
| Altman-Z | 1.6 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 0.34 indicates that ARES may have some problems paying its short term obligations.
The Current ratio of ARES (0.34) is worse than 84.12% of its industry peers.
ARES has a Quick Ratio of 0.34. 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 (0.34) is worse than 84.12% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.34 | ||
| Quick Ratio | 0.34 |
3. Growth
3.1 Past
ARES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.90%, which is quite good.
Measured over the past years, ARES shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.77% on average per year.
ARES shows a strong growth in Revenue. In the last year, the Revenue has grown by 21.00%.
ARES shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 17.09% yearly.
EPS 1Y (TTM)13.9%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%36.25%
Revenue 1Y (TTM)21%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%25.11%
3.2 Future
The Earnings Per Share is expected to grow by 25.57% on average over the next years. This is a very strong growth
Based on estimates for the next years, ARES will show a very strong growth in Revenue. The Revenue will grow by 22.70% on average per year.
EPS Next Y32.08%
EPS Next 2Y29%
EPS Next 3Y25.57%
EPS Next 5YN/A
Revenue Next Year24.14%
Revenue Next 2Y23.88%
Revenue Next 3Y22.7%
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 accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 41.64 indicates a quite expensive valuation of ARES.
75.54% of the companies in the same industry are cheaper than ARES, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of ARES to the average of the S&P500 Index (27.30), we can say ARES is valued expensively.
With a Price/Forward Earnings ratio of 26.85, ARES can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ARES indicates a slightly more expensive valuation: ARES is more expensive than 65.67% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, ARES is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.64 | ||
| Fwd PE | 26.85 |
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 61.37% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ARES is valued a bit cheaper than the industry average as 67.81% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.53 | ||
| EV/EBITDA | 64.9 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
A more expensive valuation may be justified as ARES's earnings are expected to grow with 25.57% in the coming years.
PEG (NY)1.3
PEG (5Y)2.22
EPS Next 2Y29%
EPS Next 3Y25.57%
5. Dividend
5.1 Amount
ARES has a Yearly Dividend Yield of 2.52%.
ARES's Dividend Yield is comparable with the industry average which is at 8.10.
Compared to an average S&P500 Dividend Yield of 2.37, ARES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.52% |
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.
As ARES did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)5.8%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
ARES pays out 403.92% of its income as dividend. This is not a sustainable payout ratio.
The dividend of ARES is growing, but earnings are growing more, so the dividend growth is sustainable.
DP403.92%
EPS Next 2Y29%
EPS Next 3Y25.57%
177.37
-2.76 (-1.53%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners80.27%
Inst Owner Change0%
Ins Owners3%
Ins Owner Change3.41%
Market Cap57.93B
Analysts78.26
Price Target183.87 (3.66%)
Short Float %3.4%
Short Ratio4.16
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.52% |
Yearly Dividend4.22
Dividend Growth(5Y)5.8%
DP403.92%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.93%
Min EPS beat(2)-7.09%
Max EPS beat(2)12.95%
EPS beat(4)1
Avg EPS beat(4)0.83%
Min EPS beat(4)-7.09%
Max EPS beat(4)12.95%
EPS beat(8)3
Avg EPS beat(8)-0.69%
EPS beat(12)5
Avg EPS beat(12)-0.36%
EPS beat(16)7
Avg EPS beat(16)1.83%
Revenue beat(2)1
Avg Revenue beat(2)1.05%
Min Revenue beat(2)-4.32%
Max Revenue beat(2)6.42%
Revenue beat(4)2
Avg Revenue beat(4)8.9%
Min Revenue beat(4)-4.6%
Max Revenue beat(4)38.08%
Revenue beat(8)4
Avg Revenue beat(8)11.25%
Revenue beat(12)6
Avg Revenue beat(12)9.99%
Revenue beat(16)10
Avg Revenue beat(16)30.51%
PT rev (1m)5.21%
PT rev (3m)-8.67%
EPS NQ rev (1m)-0.36%
EPS NQ rev (3m)-9.3%
EPS NY rev (1m)0.13%
EPS NY rev (3m)-1.71%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-14.76%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-6.02%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.64 | ||
| Fwd PE | 26.85 | ||
| P/S | 13.58 | ||
| P/FCF | 14.53 | ||
| P/OCF | 14.21 | ||
| P/B | 13 | ||
| P/tB | N/A | ||
| EV/EBITDA | 64.9 |
EPS(TTM)4.26
EY2.4%
EPS(NY)6.61
Fwd EY3.72%
FCF(TTM)12.21
FCFY6.88%
OCF(TTM)12.48
OCFY7.04%
SpS13.06
BVpS13.64
TBVpS-4.05
PEG (NY)1.3
PEG (5Y)2.22
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.31% | ||
| ROE | 7.98% | ||
| ROCE | 4.26% | ||
| ROIC | 3.71% | ||
| ROICexc | 4.05% | ||
| ROICexgc | 6.15% | ||
| OM | 21.45% | ||
| PM (TTM) | 8.33% | ||
| GM | N/A | ||
| FCFM | 93.48% |
ROA(3y)1.39%
ROA(5y)1.33%
ROE(3y)15.05%
ROE(5y)15.08%
ROIC(3y)3.87%
ROIC(5y)3.61%
ROICexc(3y)4.28%
ROICexc(5y)3.97%
ROICexgc(3y)4.93%
ROICexgc(5y)4.55%
ROCE(3y)4.44%
ROCE(5y)4.15%
ROICexcg growth 3Y1.38%
ROICexcg growth 5Y15.46%
ROICexc growth 3Y1.72%
ROICexc growth 5Y12.7%
OM growth 3Y7.41%
OM growth 5Y8.32%
PM growth 3Y6.46%
PM growth 5Y9.3%
GM growth 3YN/A
GM growth 5YN/A
F-Score5
Asset Turnover0.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.84 | ||
| Debt/FCF | 3.18 | ||
| Debt/EBITDA | 11.8 | ||
| Cap/Depr | 55.12% | ||
| Cap/Sales | 2.05% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 379.52% | ||
| Profit Quality | 1121.77% | ||
| Current Ratio | 0.34 | ||
| Quick Ratio | 0.34 | ||
| Altman-Z | 1.6 |
F-Score5
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)32.4%
Cap/Depr(5y)31.97%
Cap/Sales(3y)1.79%
Cap/Sales(5y)1.39%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)13.9%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%36.25%
EPS Next Y32.08%
EPS Next 2Y29%
EPS Next 3Y25.57%
EPS Next 5YN/A
Revenue 1Y (TTM)21%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%25.11%
Revenue Next Year24.14%
Revenue Next 2Y23.88%
Revenue Next 3Y22.7%
Revenue Next 5YN/A
EBIT growth 1Y1.55%
EBIT growth 3Y4.56%
EBIT growth 5Y26.83%
EBIT Next Year54.93%
EBIT Next 3Y33.01%
EBIT Next 5YN/A
FCF growth 1Y1490.29%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y1725.64%
OCF growth 3YN/A
OCF growth 5YN/A