Ares Capital (ARCC)
NASDAQ:ARCC
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Ares Capital
(NASDAQ:ARCC)
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Rating:68Neutral
Price Target:
$20.50
▲(7.39% Upside)
Action:Reiterated
Date:05/27/26
ARCC scores as moderately attractive, led by solid underlying financial performance and a constructive earnings-call backdrop with dividend maintenance/coverage and strong liquidity. The score is held back by meaningful leverage and cyclicality, mixed-to-weak technical momentum versus key moving averages, and a high P/E that offsets part of the benefit from the very high dividend yield.
Positive Factors
Strong liquidity and diversified funding access
Ares Capital's multi-billion dollar available liquidity and recent access to >$1.25B of incremental financing provide durable funding flexibility. Extended tenors and new notes reduce rollover risk, support sustained originations, cushion mark-to-market shocks and help maintain distributions through credit cycles.
Negative Factors
Meaningful leverage on the balance sheet
Ares' debt-to-equity north of 1x increases sensitivity to rising rates and spread volatility. Material leverage amplifies NAV and earnings volatility during credit stress, constrains flexibility for opportunistic investing, and elevates refinancing and covenant risks across a 2–6 month horizon.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong liquidity and diversified funding access
Ares Capital's multi-billion dollar available liquidity and recent access to >$1.25B of incremental financing provide durable funding flexibility. Extended tenors and new notes reduce rollover risk, support sustained originations, cushion mark-to-market shocks and help maintain distributions through credit cycles.
Read all positive factors
Ares Capital (ARCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.69B
Dividend Yield9.64%
Average Volume (3M)5.08M
Price to Earnings (P/E)12.0
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. Volume5,153,745
30 Day Avg. Volume5,076,575
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 Cap2.12
Enterprise Value/Revenue11.01
Enterprise Value/Gross Profit15.55
Enterprise Value/Ebitda14.15
Forecast
1Y Price Target
$20.79Price Target Upside8.88% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
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 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).
Read all updates
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
18.79
Positive
18.72
Positive
19.17
Positive
Market Momentum
0.08
Negative
60.35
Neutral
82.02
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 18.86, above the 50-day MA of 18.79, and below the 200-day MA of 19.17, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 60.35 is Neutral, neither overbought nor oversold. The STOCH value of 82.02 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 | $4.81B | 11.06 | 14.32% | 7.17% | 16.23% | -19.30% | |
69 Neutral | $2.90B | 8.53 | 15.11% | 10.00% | 14.32% | 36.84% | |
68 Neutral | $13.69B | 12.02 | 8.11% | 9.64% | 14.51% | -20.45% | |
68 Neutral | $16.41B | 49.08 | 12.56% | 3.03% | 11.60% | 28307.69% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
59 Neutral | $3.47B | 17.04 | 5.24% | 11.70% | 6.69% | -31.63% | |
52 Neutral | $3.03B | -5.63 | -9.39% | 18.52% | -38.13% | -203.38% |
* Financial Sector Average
ARCC
Ares Capital
19.26
-0.58
-2.92%
GBDC
Golub Capital Bdc
13.29
-0.02
-0.15%
HTGC
Hercules Capital, Inc.
15.50
-0.46
-2.91%
MAIN
Main Street Capital
52.02
-1.40
-2.62%
FSK
FS KKR Capital
11.06
-6.64
-37.52%
TPG
TPG
43.01
-5.02
-10.44%
Ares Capital Corporate Events
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.