Ares Capital (ARCC)
NASDAQ:ARCC
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Ares Capital
(NASDAQ:ARCC)
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Rating:69Neutral
Price Target:
$21.00
▲(10.01% Upside)
Action:Downgraded
Date:05/12/26
ARCC scores well on financial performance and earnings-call fundamentals (profitability, cash generation, dividend support, and strong liquidity), which are partially offset by balance-sheet leverage/ROE moderation and call-out risks (NAV decline and mark-to-market pressure). Technicals are only modestly supportive, and valuation is mixed due to the very high dividend yield but elevated P/E.
Positive Factors
Liquidity and funding access
Large available liquidity and demonstrated access to debt markets (>$1.25B incremental financings, five‑year notes, SMBC facility expansion) provide durable capacity to fund originations, manage redemptions and support the dividend through market stress and spread cycles.
Negative Factors
Meaningful leverage and moderated ROE
Elevated leverage is intrinsic to the BDC model but magnifies interest‑rate and spread risk. A sustained drop in ROE to ~9% implies lower capital efficiency and reduces cushion for dividend growth; higher leverage also constrains flexibility if credit stress or funding costs rise.
Read all positive and negative factors
Positive Factors
Negative Factors
Liquidity and funding access
Large available liquidity and demonstrated access to debt markets (>$1.25B incremental financings, five‑year notes, SMBC facility expansion) provide durable capacity to fund originations, manage redemptions and support the dividend through market stress and spread cycles.
Read all positive factors
Ares Capital (ARCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.43B
Dividend Yield9.64%
Average Volume (3M)5.94M
Price to Earnings (P/E)35.2
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. Volume5,311,842
30 Day Avg. Volume5,943,676
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 Cap2.14
Enterprise Value/Revenue10.93
Enterprise Value/Gross Profit15.43
Enterprise Value/Ebitda14.05
Forecast
1Y Price Target
$20.56Price Target Upside7.71% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)1.91
Revenue Forecast (FY)$3.11B
Ares Capital Business Overview & Revenue Model
Company Description
Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital ...
How the Company Makes Money
ARCC primarily makes money from investment income generated by its portfolio of private credit investments. The main revenue stream is interest income earned on loans it makes to portfolio companies, including floating-rate and fixed-rate loans, a...
Ares Capital Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 28, 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
Negative
19.09
Price Trends
18.49
Positive
18.89
Negative
19.33
Negative
Market Momentum
0.03
Positive
48.33
Neutral
21.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCC, the sentiment is Negative. The current price of 19.09 is above the 20-day moving average (MA) of 18.88, above the 50-day MA of 18.49, and below the 200-day MA of 19.33, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 48.33 is Neutral, neither overbought nor oversold. The STOCH value of 21.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 | $4.76B | 24.50 | 14.32% | 7.17% | 16.23% | -19.30% | |
69 Neutral | $13.43B | 35.16 | 8.11% | 9.64% | 14.51% | -20.45% | |
69 Neutral | $2.93B | 15.88 | 15.11% | 10.00% | 14.32% | 36.84% | |
68 Neutral | $15.63B | -1,111.90 | 12.56% | 3.03% | 11.60% | 28307.69% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
55 Neutral | $3.40B | -17.77 | 5.24% | 11.70% | 6.69% | -31.63% | |
50 Neutral | $3.07B | -1.62 | -9.39% | 18.52% | -38.13% | -203.38% |
* Financial Sector Average
ARCC
Ares Capital
18.70
-0.90
-4.61%
GBDC
Golub Capital Bdc
13.05
-0.31
-2.34%
HTGC
Hercules Capital, Inc.
15.64
0.16
1.02%
MAIN
Main Street Capital
51.22
-0.31
-0.60%
FSK
FS KKR Capital
10.96
-6.66
-37.79%
TPG
TPG
40.66
-4.61
-10.18%
Ares Capital Corporate Events
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&...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Expands and Lowers Cost of SMBC Facility
Positive
Feb 27, 2026
On February 25, 2026, Ares Capital Corporation and its wholly owned subsidiary Ares Capital JB Funding LLC amended their long-standing SMBC Funding Facility with Sumitomo Mitsui Banking Corporation, increasing total commitments from $1.1 billion t...
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.