Ares Capital (ARCC) AI Stock Analysis

• Market Cap: $14.51B
• Dividend Yield: 9.33%
• Average Volume (3M): 6.70M
• Price to Earnings (P/E): 10.1
• Beta (1Y): 0.61
• Revenue Growth: 7.71%
• EPS Growth: -29.47%
• Country: US
• Employees: 1,200
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.50
• Shares Outstanding: 705,367,430
• 10 Day Avg. Volume: 6,137,329
• 30 Day Avg. Volume: 6,703,099
• PEG Ratio: -0.80
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 4.66
• P/FCF Ratio: 10.65
• Enterprise Value/Market Cap: 1.98
• Enterprise Value/Revenue: 11.61
• Enterprise Value/Gross Profit: 17.47
• Enterprise Value/Ebitda: 15.70
• 1Y Price Target: $22.54
• Price Target Upside: 9.58% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13

• Rating: 78 Outperform
• Price Target: $23.50 ▲(14.24% Upside)

Ares Capital's overall stock score is driven by its strong financial performance and positive earnings call sentiment. The company's attractive valuation and high dividend yield further support its investment appeal. However, mixed technical indicators and some earnings call lowlights slightly moderate the score.

Positive Factors

Strong Financial Performance

Ares Capital's high net profit margin and return on equity indicate effective cost management and profitability, supporting long-term financial health.

Consistent NAV Growth

Consistent NAV growth reflects strong asset management and investment performance, enhancing shareholder value and financial stability.

Strong Credit Quality

Improved credit quality and interest coverage indicate robust risk management, ensuring long-term portfolio stability and income generation.

Negative Factors

Fluctuating Revenue Growth

Inconsistent revenue growth can lead to unpredictability in financial performance, potentially affecting long-term planning and investment strategies.

Decline in Core Earnings

A decline in core earnings year-over-year may indicate challenges in maintaining profitability, impacting future earnings potential and investor confidence.

Capital Gains Taxes

High capital gains taxes can reduce net income and cash flow, limiting the company's ability to reinvest in growth opportunities and return capital to shareholders.

Ares Capital Business Overview & Revenue Model

Company Description

Ares Capital Corporation (ARCC) is a leading publicly traded business development company headquartered in Los Angeles, California. As a subsidiary of Ares Management Corporation, ARCC primarily focuses on providing debt and equity financing solutions to middle-market companies across various sectors, including healthcare, technology, and manufacturing. The company aims to generate attractive risk-adjusted returns for its shareholders by investing in a diverse portfolio of businesses, typically through senior secured loans, subordinated debt, and equity investments.

How the Company Makes Money

Ares Capital generates revenue primarily through interest income from its investment portfolio, which includes loans and debt securities issued to middle-market companies. The company earns interest on the loans it provides, which typically feature higher interest rates compared to traditional bank loans due to the additional risk associated with lending to middle-market businesses. In addition to interest income, ARCC also gains revenue from fees associated with the origination, structuring, and management of these investments. The company may also realize capital gains from equity investments when it exits these positions. Significant partnerships with private equity firms and other financial institutions can enhance ARCC's deal flow and provide opportunities for co-investments, further contributing to its revenue streams.

Ares Capital Financial Statement Overview

Summary

Ares Capital shows strong profitability and a stable balance sheet with a high equity ratio and no debt. However, inconsistent revenue growth and negative free cash flow present concerns.

Income Statement

Ares Capital has shown strong profitability with a high EBIT margin consistently over the years, peaking at 92.4% in 2023. However, revenue growth has been inconsistent, with a notable decline in 2024. The company maintains solid net profit margins, indicating efficient cost management.

Balance Sheet

The balance sheet indicates a robust equity position with a high equity ratio of 47.3% in 2024 and no debts recorded, showing financial stability. Return on equity has been strong, though it decreased in 2024 compared to 2023, suggesting a lower return on equity investment.

Cash Flow

Cash flow analysis reveals challenges with negative free cash flow in recent years, despite significant positive operating cash flow in 2023. The variability in cash flows indicates potential risks in cash management and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.47B	2.93B	1.64B	741.00M	1.68B	541.00M
Gross Profit	1.64B	2.99B	1.73B	741.00M	1.82B	185.00M
EBITDA	1.83B	2.32B	2.12B	1.16B	1.60B	823.00M
Net Income	1.42B	1.52B	1.52B	600.00M	1.57B	484.00M
Balance Sheet
Total Assets	30.81B	28.25B	23.80B	22.40B	20.84B	16.20B
Cash, Cash Equivalents and Short-Term Investments	1.04B	635.00M	535.00M	303.00M	372.00M	254.00M
Total Debt	0.00	13.76B	11.94B	12.32B	11.14B	8.55B
Total Liabilities	16.48B	14.90B	12.60B	12.84B	11.97B	9.02B
Stockholders Equity	14.32B	13.36B	11.20B	9.55B	8.87B	7.18B
Cash Flow
Free Cash Flow	-880.00M	1.28B	1.00B	746.00M	935.00M	734.00M
Operating Cash Flow	-880.00M	1.28B	1.00B	746.00M	935.00M	734.00M
Investing Cash Flow	-2.86B	-3.41B	-489.00M	-2.10B	-3.39B	-1.29B
Financing Cash Flow	2.19B	2.42B	-284.00M	1.21B	2.62B	707.00M

Ares Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.57
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 20.57 is above the 20-day moving average (MA) of 19.86, below the 50-day MA of 20.82, and below the 200-day MA of 21.09, indicating a neutral trend. The MACD of -0.16 indicates Negative momentum. The RSI at 56.62 is Neutral, neither overbought nor oversold. The STOCH value of 89.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARCC.

Ares Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	―	$14.51B	10.08	10.25%	9.33%	7.71%	-29.47%
MAIN	―	$5.23B	9.64	19.65%	7.20%	28.32%	13.63%
GBDC	―	$3.78B	10.03	9.33%	11.63%	32.19%	-13.72%
Sector *	―	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TPG	―	$21.35B	―	2.55%	3.32%	43.48%	-24.02%
FSK	―	$4.30B	19.72	3.39%	18.24%	-8.32%	-65.56%
HTGC	―	$3.28B	11.97	12.81%	10.47%	-15.88%	-13.91%

Ares Capital Corporate Events

Ares Capital Reports Q3 2025 Earnings and Dividend

Ares Capital Corporation is a leading specialty finance company that provides direct loans and other investments to private middle-market companies in the United States, focusing on senior secured loans, subordinated debt, and equity investments.

Ares Capital Announces Q3 2025 Financial Results

On October 28, 2025, Ares Capital Corporation announced its financial results for the third quarter ending September 30, 2025, and declared a fourth quarter dividend of $0.48 per share, payable on December 30, 2025. The company’s financial performance showed a slight decrease in GAAP net income per share compared to the previous year, with net investment income also declining. However, the company’s portfolio investments and total assets increased, indicating a robust market position.

The most recent analyst rating on (ARCC) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.

Ares Capital Issues $650M Notes for Debt Repayment

On September 9, 2025, Ares Capital Corporation entered into a Fourth Supplemental Indenture with U.S. Bank Trust Company to issue $650 million in 5.100% notes due 2031. The proceeds from this issuance are intended to repay existing debt, with the potential for reborrowing for general corporate purposes, including investments in portfolio companies. The transaction also involved a forward-starting interest rate swap to transition from a fixed to a floating interest rate, effective from July 15, 2026.

The most recent analyst rating on (ARCC) stock is a Buy with a $25.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.

Ares Capital Approves Share Issuance Below Net Asset Value

On August 8, 2025, Ares Capital Corporation held a special meeting of stockholders where a proposal was approved to allow the company to sell or issue shares of its common stock at a price below its current net asset value per share, subject to certain limitations. This authorization, which includes a cap that the number of shares issued does not exceed 25% of its outstanding shares, will be effective for a twelve-month period ending on August 8, 2026.

The most recent analyst rating on (ARCC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.

Ares Capital’s Strong Q2 Performance Highlights Resilience

The recent earnings call for Ares Capital Corporation conveyed a robust performance in the second quarter, characterized by stable earnings, an increased net asset value, and significant realized gains. The company showcased strong liquidity and resilience, despite facing challenges such as a modest increase in non-accrual rates and tariff-related volatility. The overall sentiment was positive, with the highlights significantly outweighing the lowlights.

Ares Capital Reports Strong Q2 2025 Earnings

Ares Capital Corporation is a prominent specialty finance company that focuses on providing direct loans and investments to private middle market companies in the United States, aiming to generate attractive income and potential capital appreciation for investors. In its latest earnings report, Ares Capital announced a third-quarter dividend of $0.48 per share and reported financial results for the second quarter of 2025, highlighting strong core earnings and growth in net asset value. The company reported a GAAP net income of $361 million, or $0.52 per share, consistent with the previous year, while core EPS decreased to $0.50 from $0.61. Ares Capital’s portfolio investments increased to $27.9 billion, with a total asset value of $29.1 billion, and the company maintained a stable debt/equity ratio. The firm also raised over $2 billion in new debt capital, enhancing its liquidity position to support portfolio growth. Looking ahead, Ares Capital is optimistic about benefiting from increased market transaction activity, leveraging its strong relationships and market coverage.

Ares Capital Announces Q2 2025 Financial Results

On July 29, 2025, Ares Capital Corporation announced its financial results for the second quarter ending June 30, 2025, and declared a third quarter dividend of $0.48 per share, payable on September 30, 2025. The company reported a GAAP net income per share of $0.52 and a core EPS of $0.50, with net investment income totaling $342 million. The announcement reflects Ares Capital’s stable financial performance and commitment to returning value to its shareholders, maintaining its position as a strong player in the specialty finance sector.

The most recent analyst rating on (ARCC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.