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Ares Capital
(NASDAQ:ARCC)
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Rating:70Outperform
Price Target:
$20.00
▲(4.77% Upside)
Action:Upgraded
Date:06/23/26
The score is driven primarily by solid financial performance (strong profitability and cash generation, though cyclical with meaningful leverage) and attractive valuation (low P/E and very high dividend yield). These positives are partially offset by weak technical momentum and near-term earnings/NAV pressure discussed on the latest call, while recent financing-related corporate events modestly support the outlook.
Positive Factors
Strong liquidity and funding access
Ares’s ~$6.0B liquidity buffer plus >$1.25B of incremental financings and recent facility extensions provide durable funding flexibility. This materially reduces refinancing risk, lets the firm sustain originations and dividends during mark-to-market volatility, and enables opportunistic lending as spreads widen.
Negative Factors
Meaningful leverage and moderating ROE
Material leverage (net debt-to-equity ~1.1x) combined with a lower ROE (~9% vs ~17.7% in 2021) leaves ARCC sensitive to rising credit costs or losses. Leverage amplifies downside in stressed environments and reduced capital efficiency constrains organic dividend growth and reinvestment over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong liquidity and funding access
Ares’s ~$6.0B liquidity buffer plus >$1.25B of incremental financings and recent facility extensions provide durable funding flexibility. This materially reduces refinancing risk, lets the firm sustain originations and dividends during mark-to-market volatility, and enables opportunistic lending as spreads widen.
Read all positive factors
Ares Capital (ARCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.45B
Dividend Yield9.64%
Average Volume (3M)4.96M
Price to Earnings (P/E)11.5
Beta (1Y)0.70
Revenue Growth14.51%
EPS Growth-20.45%
CountryUS
Employees1,200
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)1.63
Shares Outstanding718,022,800
10 Day Avg. Volume5,198,913
30 Day Avg. Volume4,960,895
Financial Highlights & Ratios
PEG Ratio-0.46
Price to Book (P/B)0.99
Price to Sales (P/S)4.50
P/FCF Ratio12.38
Enterprise Value/Market Cap2.11
Enterprise Value/Revenue10.77
Enterprise Value/Gross Profit15.20
Enterprise Value/Ebitda13.84
Forecast
1Y Price Target
$20.50Price Target Upside7.39% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)1.92
Revenue Forecast (FY)$3.11B
Ares Capital Business Overview & Revenue Model
Company Description
Ares Capital Corporation (ARCC) operates as a Business Development Company (BDC), delivering diverse financing solutions predominantly to middle-market enterprises. The firm's expertise lies in facilitating various corporate actions, including fun...
How the Company Makes Money
ARCC makes money primarily from investment income generated by its portfolio of debt and equity investments. The largest revenue stream is interest income on loans it holds (including cash-pay interest and, where applicable, payment-in-kind (PIK) ...
Ares Capital Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Positive
The call balanced notable short-term market headwinds—primarily mark-to-market losses from spread widening, a QoQ decline in GAAP net income and a modest NAV decline—with multiple durable positives: strong liquidity (~$6 billion), active originations ($3.2 billion), diversified and healthy portfolio fundamentals (9% LTM EBITDA growth, low nonaccruals), access to debt capital (>$1.25 billion of financings) and dividend coverage (core EPS plus realized gains exceeded the dividend). Management emphasized conservative underwriting, portfolio management capabilities, and an independent review of AI risk in software that largely validated portfolio positioning. Given the strength of the balance sheet, funding access, and ongoing origination opportunities as spreads widen, the positives appear to outweigh the temporary valuation-related setbacks.Positive Updates
Strong Liquidity and Balance Sheet
Approximately $6.0 billion of available liquidity; total portfolio at fair value of $29.5 billion (stable QoQ, up from $27.1 billion a year ago, +~8.9% YoY). Net asset value totaled $14.1 billion ($19.59 per share). Accessed >$1.25 billion of incremental debt financing in Q1, including $750 million five-year unsecured notes (priced at T+180 bps, swapped to SOFR+172 bps) and a $500 million expansion of an SMBC facility (5 bps spread reduction).
Negative Updates
GAAP Net Income Decline and Mark-to-Market Losses
GAAP net income per share was $0.13 in Q1 2026, down from $0.41 in Q4 2025 (-68% QoQ) and $0.36 a year ago (-64% YoY). Management attributed the decline largely to net unrealized losses driven by spread widening and market-driven unrealized depreciation (approximately 70% of marks were mark-to-market related rather than credit-related).
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Q1-2026 Updates
Positive
Negative
Strong Liquidity and Balance Sheet
Approximately $6.0 billion of available liquidity; total portfolio at fair value of $29.5 billion (stable QoQ, up from $27.1 billion a year ago, +~8.9% YoY). Net asset value totaled $14.1 billion ($19.59 per share). Accessed >$1.25 billion of incremental debt financing in Q1, including $750 million five-year unsecured notes (priced at T+180 bps, swapped to SOFR+172 bps) and a $500 million expansion of an SMBC facility (5 bps spread reduction).
Read all positive updates
Company Guidance
Management reiterated guidance to maintain a stable quarterly dividend of $0.48 (payable June 30, record June 15), noting Q1 core EPS of $0.47 (GAAP EPS $0.13) and $0.15 per share of net realized gains, and saying the current dividend “approximates long‑run underlying earnings power” given an annualized ROE of 9.6%, available liquidity of ~ $6.0 billion, a total portfolio at fair value of $29.5 billion across 607 companies (average position <20 bps), NAV of $14.1 billion or $19.59 per share (down $0.35 q/q, $0.23 y/y), and a debt‑to‑equity ratio net of cash of 1.10x; they flagged portfolio credit metrics of nonaccruals of 2.1% at cost (1.2% at FV), Q1 originations of over $3.2 billion (70% from existing borrowers), repayments ≈7% of portfolio at cost, a $1.8 billion backlog (through 4/23) with April commitments ≈$200 million, early Q2 spread/fee improvement (backlog +35 bps spreads / +40 bps fees vs Q1; first‑lien spreads +20 bps q/q, leverage down ~½ turn), balance‑sheet actions including >$1.25 billion incremental financing (including $750 million 5‑yr notes at T+180 bps swapped to SOFR+172 bps and a $500 million SMBC facility expansion), and portfolio‑level software metrics (weighted avg EBITDA $340 million; ~85% of software FV rated low risk, ~14% medium, ~1% high—which is ≈0.3% of total FV)—plus a taxable spillover of $988 million (≈$1.38/share) available for 2026 distributions.Ares Capital Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
62
Positive
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.63B | 3.15B | 2.37B | 2.17B | 1.20B | 2.05B |
| Gross Profit | 1.86B | 2.38B | 1.71B | 1.64B | 741.00M | 1.68B |
| EBITDA | 2.05B | 2.19B | 1.59B | 1.54B | 655.00M | 1.60B |
| Net Income | 1.15B | 1.30B | 1.52B | 1.52B | 600.00M | 1.57B |
Balance Sheet | ||||||
| Total Assets | 30.68B | 31.23B | 28.25B | 23.80B | 22.40B | 20.84B |
| Cash, Cash Equivalents and Short-Term Investments | 505.00M | 924.00M | 635.00M | 535.00M | 303.00M | 372.00M |
| Total Debt | 15.85B | 15.99B | 13.76B | 11.95B | 12.38B | 11.16B |
| Total Liabilities | 16.61B | 16.92B | 14.90B | 12.60B | 12.84B | 11.97B |
| Stockholders Equity | 14.06B | 14.32B | 13.36B | 11.20B | 9.55B | 8.87B |
Cash Flow | ||||||
| Free Cash Flow | 1.07B | 1.14B | 1.28B | 1.00B | 746.00M | 935.00M |
| Operating Cash Flow | 1.07B | 1.14B | 1.28B | 1.00B | 746.00M | 935.00M |
| Investing Cash Flow | -2.31B | -2.86B | -3.41B | -489.00M | -2.10B | -3.39B |
| Financing Cash Flow | 1.15B | 1.78B | 2.42B | -284.00M | 1.21B | 2.62B |
Ares Capital Technical Analysis
Positive
19.09
Price Trends
18.38
Positive
18.16
Positive
18.56
Positive
Market Momentum
0.04
Negative
60.52
Neutral
85.94
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCC, the sentiment is Positive. The current price of 19.09 is above the 20-day moving average (MA) of 18.36, above the 50-day MA of 18.38, and above the 200-day MA of 18.56, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 60.52 is Neutral, neither overbought nor oversold. The STOCH value of 85.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARCC.
Ares Capital Risk Analysis
Ares Capital disclosed 57 risk factors in its most recent earnings report. Ares Capital reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ares Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $4.83B | 10.94 | 14.32% | 7.17% | 16.23% | -19.30% | |
70 Outperform | $13.45B | 11.49 | 8.11% | 9.64% | 14.51% | -20.45% | |
68 Neutral | $2.99B | 8.72 | 15.11% | 10.00% | 14.32% | 36.84% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $15.92B | 50.98 | 12.56% | 3.03% | 11.60% | 28307.69% | |
59 Neutral | $3.38B | 16.87 | 5.24% | 11.70% | 6.69% | -31.63% | |
53 Neutral | $2.92B | -5.29 | -9.39% | 18.52% | -38.13% | -203.38% |
* Financial Sector Average
ARCC
Ares Capital
18.73
-1.60
-7.89%
GBDC
Golub Capital Bdc
12.99
-0.28
-2.09%
HTGC
Hercules Capital, Inc.
15.96
-0.67
-4.01%
MAIN
Main Street Capital
51.96
-4.85
-8.54%
FSK
FS KKR Capital
10.43
-7.52
-41.90%
TPG
TPG
41.43
-10.35
-19.99%
Ares Capital Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Expands BNP Funding Facility Commitments
Positive
Jun 22, 2026
On June 18, 2026, Ares Capital Corporation and its wholly owned subsidiary ARCC FB Funding LLC amended their Revolving Credit and Security Agreement with BNP Paribas, known as the BNP Funding Facility. The Tenth Amendment increased total commitmen...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Expands and Extends Senior Secured Credit Facility
Positive
May 26, 2026
On May 21, 2026, Ares Capital Corporation amended and restated its senior secured credit facility, increasing total commitments from about $5.312 billion to $5.481 billion and maintaining a structure of roughly $4.3 billion in revolving loans and ...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Announces New $800 Million Note Offering
Positive
May 11, 2026
On May 11, 2026, Ares Capital Corporation issued $800 million of 5.550% unsecured notes due January 15, 2030, under a supplemental indenture with U.S. Bank Trust Company, National Association. The notes, which pay interest semiannually starting Ja...
Executive/Board ChangesShareholder Meetings
Ares Capital Shareholders Elect Directors and Ratify Auditor
Neutral
May 8, 2026
On May 7, 2026, Ares Capital Corporation held its annual meeting of stockholders, with 718,022,845 common shares entitled to vote as of the March 2, 2026 record date, and shareholders elected three Class I directors—Ann Torre Bates, Steven B...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Updates At-the-Market Equity Offering Program
Neutral
Apr 28, 2026
On April 28, 2026, Ares Capital Corporation, together with its investment adviser and administrator, entered into new equity distribution agreements with a syndicate of sales agents that will allow the company to issue and sell up to $1.5 billion ...
DividendsFinancial Disclosures
Ares Capital Posts Q1 2026 Results, Maintains Dividend
Neutral
Apr 28, 2026
On April 28, 2026, Ares Capital Corporation reported financial results for the first quarter ended March 31, 2026, showing GAAP net income of $92 million, or $0.13 per share, and net investment income of $398 million, or $0.55 per share. The firm&...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.