Ares Capital (ARCC) AI Stock Analysis

• Market Cap: $14.09B
• Dividend Yield: 9.33%
• Average Volume (3M): 5.74M
• Price to Earnings (P/E): 9.9
• Beta (1Y): 0.59
• Revenue Growth: 10.34%
• EPS Growth: -24.16%
• Country: US
• Employees: 1,200
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.50
• Shares Outstanding: 715,726,600
• 10 Day Avg. Volume: 3,757,311
• 30 Day Avg. Volume: 5,735,461
• PEG Ratio: -0.80
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 5.77
• P/FCF Ratio: 10.65
• Enterprise Value/Market Cap: 2.05
• Enterprise Value/Revenue: 12.83
• Enterprise Value/Gross Profit: 18.79
• Enterprise Value/Ebitda: 20.20
• 1Y Price Target: $22.44
• Price Target Upside: 14.96% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10
• EPS Forecast (FY): 2
• Revenue Forecast (FY): $3.02B

• Rating: 74 Outperform
• Price Target: $22.00 ▲(12.70% Upside)

Ares Capital's overall stock score is driven by strong financial performance and attractive valuation, supported by a high dividend yield and low P/E ratio. The positive sentiment from the recent earnings call further boosts confidence. However, the technical analysis indicates a bearish trend, which slightly tempers the overall score.

Positive Factors

Strong Profitability

High profitability margins indicate efficient cost management and strong financial health, supporting long-term business sustainability.

Robust Transaction Volume

High transaction volume underscores Ares Capital's leading market position and ability to capitalize on investment opportunities.

Consistent Dividend Growth

Consistent NAV growth and dividend increases reflect strong financial management and commitment to shareholder returns.

Negative Factors

Fluctuating Revenue Growth

Inconsistent revenue growth can pose risks to long-term financial stability if not addressed, potentially impacting investor confidence.

Decline in Core Earnings

A decline in core earnings year-over-year may indicate challenges in maintaining profitability, affecting future financial performance.

Capital Gains Taxes Impact

High capital gains taxes can reduce net income and cash available for reinvestment, potentially affecting growth and shareholder returns.

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 and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.

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 demonstrates strong financial performance with robust profitability and efficient cost management, as evidenced by a net profit margin of 57.48% and a solid return on equity of 10.26%. However, fluctuating revenue growth and limited cash flow efficiency insights slightly temper the overall financial strength.

Income Statement

Ares Capital has demonstrated strong revenue growth with a TTM increase of 20.37%. The company maintains healthy margins, including a net profit margin of 57.48% and an EBIT margin of 40.41% in the TTM period. These metrics indicate robust profitability and efficient cost management. However, the revenue growth rate has fluctuated over the years, which could pose a risk if not stabilized.

Balance Sheet

The company's debt-to-equity ratio has improved to 1.00 in the TTM period, indicating a balanced leverage position. Return on equity is solid at 10.26%, reflecting effective use of equity to generate profits. However, the equity ratio is not explicitly provided, which limits a full assessment of asset financing stability.

Cash Flow

Ares Capital shows a consistent free cash flow to net income ratio of 1.0, indicating that net income is well-supported by cash flow. The free cash flow growth rate is positive at 2.66% in the TTM period, showing a stable cash generation capability. However, the operating cash flow to net income ratio is not available, which could provide further insights into cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.25B	2.37B	2.17B	1.20B	2.05B	858.00M
Gross Profit	1.53B	1.71B	1.64B	741.00M	1.68B	541.00M
EBITDA	1.43B	1.59B	1.54B	655.00M	1.60B	503.00M
Net Income	1.36B	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	15.61B	13.76B	11.95B	12.38B	11.16B	8.60B
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	1.30B	1.28B	1.00B	746.00M	935.00M	734.00M
Operating Cash Flow	1.30B	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: 19.52
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 19.52 is below the 20-day moving average (MA) of 20.20, below the 50-day MA of 20.33, and below the 200-day MA of 20.98, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 36.72 is Neutral, neither overbought nor oversold. The STOCH value of 22.23 is Neutral, 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
HTGC	77 Outperform	$3.19B	10.22	15.21%	10.64%	-15.32%	-12.29%
MAIN	75 Outperform	$5.23B	9.69	19.07%	7.40%	11.60%	9.38%
ARCC	74 Outperform	$14.09B	9.89	10.06%	9.33%	10.34%	-24.16%
GBDC	71 Outperform	$3.63B	9.62	9.33%	12.18%	32.19%	-13.72%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TPG	61 Neutral	$20.87B	576.20	7.19%	3.86%	25.02%	235.70%
FSK	58 Neutral	$4.37B	16.05	4.24%	18.29%	-13.67%	-48.49%

Ares Capital Corporate Events

Ares Capital’s Earnings Call Highlights Strong Performance

The recent earnings call for Ares Capital Corporation reflected a generally positive sentiment, with the company showcasing strong third-quarter results. Despite some challenges such as a year-over-year decline in core earnings and capital gains taxes, the highlights, including stable earnings and consistent NAV growth, significantly outweighed the negatives. The company also demonstrated robust transaction volume and strong credit quality, underscoring its solid performance in the financial market.

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.