ARES MANAGEMENT CORP - A (ARES)
US03990B1017 - Common Stock
We assign a fundamental rating of 4 out of 10 to ARES. ARES was compared to 220 industry peers in the Capital Markets industry. While ARES is still in line with the averages on profitability rating, there are concerns on its financial health. ARES shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
ARES had positive earnings in the past year.
In the past year ARES had a positive cash flow from operations.
ARES had positive earnings in each of the past 5 years.
ARES had a negative operating cash flow in each of the past 5 years.
1.2 Ratios
With a Return On Assets value of 1.56%, ARES perfoms like the industry average, outperforming 41.01% of the companies in the same industry.
The Return On Equity of ARES (18.89%) is better than 85.71% of its industry peers.
With a Return On Invested Capital value of 3.77%, ARES perfoms like the industry average, outperforming 45.62% of the companies in the same industry.
ARES had an Average Return On Invested Capital over the past 3 years of 3.86%. This is below the industry average of 6.97%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.56% | ||
| ROE | 18.89% | ||
| ROIC | 3.77% |
ROA(3y)1.41%
ROA(5y)1.2%
ROE(3y)17.93%
ROE(5y)15.88%
ROIC(3y)3.86%
ROIC(5y)3.23%
1.3 Margins
ARES has a Profit Margin (11.74%) which is in line with its industry peers.
ARES's Profit Margin has improved in the last couple of years.
The Operating Margin of ARES (27.00%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of ARES has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27% | ||
| PM (TTM) | 11.74% | ||
| GM | N/A |
OM growth 3Y12.53%
OM growth 5Y22.48%
PM growth 3Y22.4%
PM growth 5Y33.31%
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.
Compared to 5 years ago, ARES has more shares outstanding
Compared to 1 year ago, ARES has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.57, we must say that ARES is in the distress zone and has some risk of bankruptcy.
ARES has a Altman-Z score of 1.57. This is in the better half of the industry: ARES outperforms 63.59% of its industry peers.
ARES has a debt to FCF ratio of 17.77. This is a negative value and a sign of low solvency as ARES would need 17.77 years to pay back of all of its debts.
With a Debt to FCF ratio value of 17.77, ARES perfoms like the industry average, outperforming 47.00% of the companies in the same industry.
A Debt/Equity ratio of 7.09 is on the high side and indicates that ARES has dependencies on debt financing.
With a Debt to Equity ratio value of 7.09, ARES is not doing good in the industry: 88.48% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.09 | ||
| Debt/FCF | 17.77 | ||
| Altman-Z | 1.57 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARES has a Current Ratio of 0.40. This is a bad value and indicates that ARES is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.40, ARES is not doing good in the industry: 73.27% of the companies in the same industry are doing better.
A Quick Ratio of 0.40 indicates that ARES may have some problems paying its short term obligations.
ARES has a worse Quick ratio (0.40) than 73.27% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.4 | ||
| Quick Ratio | 0.4 |
3. Growth
3.1 Past
ARES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.22%, which is quite good.
ARES shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.78% yearly.
Looking at the last year, ARES shows a quite strong growth in Revenue. The Revenue has grown by 18.87% in the last year.
The Revenue has been growing by 30.53% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)8.22%
EPS 3Y25.2%
EPS 5Y20.78%
EPS Q2Q%14.46%
Revenue 1Y (TTM)18.87%
Revenue growth 3Y27.22%
Revenue growth 5Y30.53%
Sales Q2Q%68.3%
3.2 Future
The Earnings Per Share is expected to grow by 24.25% on average over the next years. This is a very strong growth
ARES is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 27.71% yearly.
EPS Next Y14.58%
EPS Next 2Y25.17%
EPS Next 3Y24.25%
EPS Next 5YN/A
Revenue Next Year25.49%
Revenue Next 2Y29.28%
Revenue Next 3Y27.71%
Revenue Next 5YN/A
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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 44.63, which means the current valuation is very expensive for ARES.
Compared to the rest of the industry, the Price/Earnings ratio of ARES indicates a slightly more expensive valuation: ARES is more expensive than 79.26% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.29, ARES is valued quite expensively.
A Price/Forward Earnings ratio of 30.82 indicates a quite expensive valuation of ARES.
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 71.89% of the companies listed in the same industry.
ARES is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.01, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.63 | ||
| Fwd PE | 30.82 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ARES.
Based on the Price/Free Cash Flow ratio, ARES is valued a bit more expensive than 63.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 69.06 | ||
| EV/EBITDA | 61.4 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ARES does not grow enough to justify the current Price/Earnings ratio.
ARES's earnings are expected to grow with 24.25% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.06
PEG (5Y)2.15
EPS Next 2Y25.17%
EPS Next 3Y24.25%
5. Dividend
5.1 Amount
ARES has a Yearly Dividend Yield of 2.13%. Purely for dividend investing, there may be better candidates out there.
ARES's Dividend Yield is slightly below the industry average, which is at 8.96.
Compared to an average S&P500 Dividend Yield of 2.19, ARES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.13% |
5.2 History
The dividend of ARES decreases each year by -1.20%.
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 last 3 years.
Dividend Growth(5Y)-1.2%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
304.70% of the earnings are spent on dividend by ARES. This is not a sustainable payout ratio.
DP304.7%
EPS Next 2Y25.17%
EPS Next 3Y24.25%
ARES MANAGEMENT CORP - A
NYSE:ARES (11/25/2024, 1:56:05 PM)
176.27
+0.75 (+0.43%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap55.18B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.13% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
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Min EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 44.63 | ||
| Fwd PE | 30.82 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.06
PEG (5Y)2.15
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.56% | ||
| ROE | 18.89% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 27% | ||
| PM (TTM) | 11.74% | ||
| GM | N/A | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.13
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.09 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.4 | ||
| Quick Ratio | 0.4 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)8.22%
EPS 3Y25.2%
EPS 5Y
EPS Q2Q%
EPS Next Y14.58%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)18.87%
Revenue growth 3Y27.22%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y