ARES MANAGEMENT CORP - A (ARES) Stock Fundamental Analysis
NYSE:ARES - New York Stock Exchange, Inc. - US03990B1017 - Common Stock - Currency: USD
ARES gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 228 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 is valued quite expensive, but it does show an excellent growth.
1. Profitability
1.1 Basic Checks
In the past year ARES was profitable.
ARES had a positive operating cash flow in the past year.
Each year in the past 5 years ARES has been profitable.
ARES had negative operating cash flow in 4 of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 1.65%, ARES is doing worse than 60.53% of the companies in the same industry.
With a decent Return On Equity value of 11.58%, ARES is doing good in the industry, outperforming 61.40% of the companies in the same industry.
ARES's Return On Invested Capital of 4.34% is in line compared to the rest of the industry. ARES outperforms 57.02% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ARES is below the industry average of 7.06%.
The 3 year average ROIC (3.87%) for ARES is below the current ROIC(4.34%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.65% | ||
| ROE | 11.58% | ||
| ROIC | 4.34% |
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 (10.56%) than 61.40% of its industry peers.
ARES's Profit Margin has improved in the last couple of years.
The Operating Margin of ARES (25.56%) is comparable to the rest of the industry.
ARES's Operating Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.56% | ||
| PM (TTM) | 10.56% | ||
| 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
The number of shares outstanding for ARES has been increased compared to 1 year ago.
Compared to 5 years ago, ARES has more shares outstanding
Compared to 1 year ago, ARES has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.44, we must say that ARES is in the distress zone and has some risk of bankruptcy.
ARES has a better Altman-Z score (1.44) than 65.35% of its industry peers.
The Debt to FCF ratio of ARES is 4.63, which is a neutral value as it means it would take ARES, 4.63 years of fcf income to pay off all of its debts.
ARES's Debt to FCF ratio of 4.63 is fine compared to the rest of the industry. ARES outperforms 67.54% of its industry peers.
ARES has a Debt/Equity ratio of 3.53. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ARES (3.53) is worse than 82.02% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.53 | ||
| Debt/FCF | 4.63 | ||
| Altman-Z | 1.44 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARES has a Current Ratio of 0.60. 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 0.60, ARES is not doing good in the industry: 71.05% of the companies in the same industry are doing better.
ARES has a Quick Ratio of 0.60. 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 Quick ratio value of 0.60, ARES is not doing good in the industry: 71.05% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.6 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
ARES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.77%, 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 been growing slightly by 6.96% in the past year.
The Revenue has been growing by 17.09% on average over the past years. This is quite good.
EPS 1Y (TTM)8.77%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%1.65%
Revenue 1Y (TTM)6.96%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%19.45%
3.2 Future
The Earnings Per Share is expected to grow by 24.15% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 26.66% on average over the next years. This is a very strong growth
EPS Next Y29.14%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
EPS Next 5YN/A
Revenue Next Year32.09%
Revenue Next 2Y28.15%
Revenue Next 3Y26.66%
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
The Price/Earnings ratio is 35.58, which means the current valuation is very expensive for ARES.
Based on the Price/Earnings ratio, ARES is valued a bit more expensive than the industry average as 74.56% of the companies are valued more cheaply.
ARES's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 28.29.
ARES is valuated quite expensively with a Price/Forward Earnings ratio of 27.55.
Based on the Price/Forward Earnings ratio, ARES is valued a bit more expensive than 69.74% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, ARES is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.58 | ||
| Fwd PE | 27.55 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ARES is valued a bit cheaper than 63.16% of the companies in the same industry.
61.84% 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 | 17.09 | ||
| EV/EBITDA | 48.53 |
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 24.15% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.22
PEG (5Y)1.9
EPS Next 2Y28.68%
EPS Next 3Y24.15%
5. Dividend
5.1 Amount
ARES has a Yearly Dividend Yield of 3.17%.
In the last 3 months the price of ARES has falen by -26.18%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 8.65, ARES has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.52, ARES pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
5.2 History
The dividend of ARES has a limited annual growth rate of 5.82%.
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)5.82%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
319.58% 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.
DP319.58%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
141.24
+1.64 (+1.17%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners85.3%
Inst Owner Change-0.22%
Ins Owners3.33%
Ins Owner Change-3.3%
Market Cap46.13B
Analysts77.39
Price Target201.33 (42.54%)
Short Float %2.1%
Short Ratio2.84
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
Yearly Dividend4.22
Dividend Growth(5Y)5.82%
DP319.58%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-4.19%
Min EPS beat(2)-7.09%
Max EPS beat(2)-1.29%
EPS beat(4)0
Avg EPS beat(4)-6.07%
Min EPS beat(4)-14.66%
Max EPS beat(4)-1.26%
EPS beat(8)2
Avg EPS beat(8)-4.12%
EPS beat(12)4
Avg EPS beat(12)-1.84%
EPS beat(16)6
Avg EPS beat(16)0.33%
Revenue beat(2)2
Avg Revenue beat(2)22.25%
Min Revenue beat(2)6.42%
Max Revenue beat(2)38.08%
Revenue beat(4)2
Avg Revenue beat(4)7.41%
Min Revenue beat(4)-10.28%
Max Revenue beat(4)38.08%
Revenue beat(8)5
Avg Revenue beat(8)13.57%
Revenue beat(12)7
Avg Revenue beat(12)12.05%
Revenue beat(16)11
Avg Revenue beat(16)33.88%
PT rev (1m)-1.72%
PT rev (3m)7.95%
EPS NQ rev (1m)-3.54%
EPS NQ rev (3m)-10.76%
EPS NY rev (1m)-3.54%
EPS NY rev (3m)-10.32%
Revenue NQ rev (1m)-0.37%
Revenue NQ rev (3m)-0.28%
Revenue NY rev (1m)-0.6%
Revenue NY rev (3m)-1.9%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.58 | ||
| Fwd PE | 27.55 | ||
| P/S | 11.87 | ||
| P/FCF | 17.09 | ||
| P/OCF | 16.53 | ||
| P/B | 13.02 | ||
| P/tB | 32.83 | ||
| EV/EBITDA | 48.53 |
EPS(TTM)3.97
EY2.81%
EPS(NY)5.13
Fwd EY3.63%
FCF(TTM)8.27
FCFY5.85%
OCF(TTM)8.55
OCFY6.05%
SpS11.89
BVpS10.85
TBVpS4.3
PEG (NY)1.22
PEG (5Y)1.9
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.65% | ||
| ROE | 11.58% | ||
| ROCE | 4.99% | ||
| ROIC | 4.34% | ||
| ROICexc | 5.04% | ||
| ROICexgc | 6.06% | ||
| OM | 25.56% | ||
| PM (TTM) | 10.56% | ||
| GM | N/A | ||
| FCFM | 69.49% |
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-Score6
Asset Turnover0.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.53 | ||
| Debt/FCF | 4.63 | ||
| Debt/EBITDA | 10.86 | ||
| Cap/Depr | 57.71% | ||
| Cap/Sales | 2.36% | ||
| Interest Coverage | 1.15 | ||
| Cash Conversion | 242.35% | ||
| Profit Quality | 658.14% | ||
| Current Ratio | 0.6 | ||
| Quick Ratio | 0.6 | ||
| Altman-Z | 1.44 |
F-Score6
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)32.4%
Cap/Depr(5y)31.96%
Cap/Sales(3y)1.79%
Cap/Sales(5y)1.38%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)8.77%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%1.65%
EPS Next Y29.14%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
EPS Next 5YN/A
Revenue 1Y (TTM)6.96%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%19.45%
Revenue Next Year32.09%
Revenue Next 2Y28.15%
Revenue Next 3Y26.66%
Revenue Next 5YN/A
EBIT growth 1Y7.95%
EBIT growth 3Y4.56%
EBIT growth 5Y26.83%
EBIT Next Year58.97%
EBIT Next 3Y33.91%
EBIT Next 5YN/A
FCF growth 1Y998.55%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y1296.58%
OCF growth 3YN/A
OCF growth 5YN/A