ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
NASDAQ:ARCC - Nasdaq - US04010L1035 - Common Stock - Currency: USD
ARCC gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 233 industry peers in the Capital Markets industry. ARCC has a medium profitability rating, but doesn't score so well on its financial health evaluation. ARCC is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
ARCC had positive earnings in the past year.
In the past year ARCC has reported a negative cash flow from operations.
ARCC had positive earnings in each of the past 5 years.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 4.64%, ARCC is doing good in the industry, outperforming 66.95% of the companies in the same industry.
ARCC has a Return On Equity (9.61%) which is in line with its industry peers.
The Return On Invested Capital of ARCC (4.34%) is comparable to the rest of the industry.
ARCC had an Average Return On Invested Capital over the past 3 years of 4.28%. This is below the industry average of 7.86%.
The 3 year average ROIC (4.28%) for ARCC is below the current ROIC(4.34%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.64% | ||
| ROE | 9.61% | ||
| ROIC | 4.34% |
ROA(3y)4.82%
ROA(5y)4.99%
ROE(3y)10.42%
ROE(5y)11.14%
ROIC(3y)4.28%
ROIC(5y)4%
1.3 Margins
Looking at the Profit Margin, with a value of 43.50%, ARCC belongs to the top of the industry, outperforming 87.98% of the companies in the same industry.
ARCC's Profit Margin has been stable in the last couple of years.
The Operating Margin of ARCC (50.18%) is better than 85.41% of its industry peers.
ARCC's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 51.67%, ARCC is in line with its industry, outperforming 57.08% of the companies in the same industry.
ARCC's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 50.18% | ||
| PM (TTM) | 43.5% | ||
| GM | 51.67% |
OM growth 3Y5.28%
OM growth 5Y-1.82%
PM growth 3Y-16.07%
PM growth 5Y-0.39%
GM growth 3Y4.55%
GM growth 5Y-1.61%
2. Health
2.1 Basic Checks
ARCC has more shares outstanding than it did 1 year ago.
The number of shares outstanding for ARCC has been increased compared to 5 years ago.
Compared to 1 year ago, ARCC has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.98, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.98, ARCC is in line with its industry, outperforming 49.36% of the companies in the same industry.
A Debt/Equity ratio of 1.02 is on the high side and indicates that ARCC has dependencies on debt financing.
ARCC has a Debt to Equity ratio (1.02) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.02 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.98 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 1.27 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC has a Current ratio (1.27) which is in line with its industry peers.
ARCC has a Quick Ratio of 1.27. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
With a Quick ratio value of 1.27, ARCC perfoms like the industry average, outperforming 55.36% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 |
3. Growth
3.1 Past
The earnings per share for ARCC have decreased by -6.28% in the last year.
The Earnings Per Share has been growing slightly by 4.06% on average over the past years.
ARCC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.01%.
ARCC shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.37% yearly.
EPS 1Y (TTM)-6.28%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-15.25%
Revenue 1Y (TTM)12.01%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -4.81% on average per year.
Based on estimates for the next years, ARCC will show a small growth in Revenue. The Revenue will grow by 4.01% on average per year.
EPS Next Y-11.06%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
EPS Next 5YN/A
Revenue Next Year-0.06%
Revenue Next 2Y2.69%
Revenue Next 3Y4.01%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 10.21, the valuation of ARCC can be described as very reasonable.
ARCC's Price/Earnings ratio is a bit cheaper when compared to the industry. ARCC is cheaper than 72.96% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.51, ARCC is valued rather cheaply.
The Price/Forward Earnings ratio is 11.26, which indicates a very decent valuation of ARCC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ARCC indicates a somewhat cheap valuation: ARCC is cheaper than 66.09% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 35.58. ARCC is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.21 | ||
| Fwd PE | 11.26 |
4.2 Price Multiples
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
A cheap valuation may be justified as ARCC's earnings are expected to decrease with -4.81% in the coming years.
PEG (NY)N/A
PEG (5Y)2.52
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 8.43%, ARCC is a good candidate for dividend investing.
ARCC's Dividend Yield is a higher than the industry average which is at 7.77.
Compared to an average S&P500 Dividend Yield of 2.35, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.43% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 2.32%.
ARCC has paid a dividend for at least 10 years, which is a reliable track record.
ARCC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)2.32%
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
89.57% of the earnings are spent on dividend by ARCC. This is not a sustainable payout ratio.
The Dividend Rate of ARCC has been growing, while earnings will be declining. This means the dividend growth is most likely not sustainable.
DP89.57%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
22.86
+0.02 (+0.09%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners32.03%
Inst Owner Change0%
Ins Owners0.48%
Ins Owner Change-7.9%
Market Cap15.87B
Analysts83
Price Target23.23 (1.62%)
Short Float %2.17%
Short Ratio3.82
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.43% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP89.57%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-7.74%
Min EPS beat(2)-8.8%
Max EPS beat(2)-6.69%
EPS beat(4)1
Avg EPS beat(4)-4.27%
Min EPS beat(4)-8.8%
Max EPS beat(4)2.86%
EPS beat(8)3
Avg EPS beat(8)-2.17%
EPS beat(12)5
Avg EPS beat(12)-0.91%
EPS beat(16)8
Avg EPS beat(16)1.21%
Revenue beat(2)0
Avg Revenue beat(2)-6.45%
Min Revenue beat(2)-7.65%
Max Revenue beat(2)-5.25%
Revenue beat(4)1
Avg Revenue beat(4)-2.82%
Min Revenue beat(4)-7.65%
Max Revenue beat(4)3.48%
Revenue beat(8)2
Avg Revenue beat(8)-0.36%
Revenue beat(12)5
Avg Revenue beat(12)0.51%
Revenue beat(16)8
Avg Revenue beat(16)1.62%
PT rev (1m)0.6%
PT rev (3m)-2.4%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)-6.49%
EPS NY rev (1m)-1.59%
EPS NY rev (3m)-6.23%
Revenue NQ rev (1m)0.22%
Revenue NQ rev (3m)-5.06%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-5.93%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.21 | ||
| Fwd PE | 11.26 | ||
| P/S | 5.25 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.16 | ||
| P/tB | 1.16 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.24
EY9.8%
EPS(NY)2.03
Fwd EY8.88%
FCF(TTM)-3.47
FCFYN/A
OCF(TTM)-3.47
OCFYN/A
SpS4.35
BVpS19.7
TBVpS19.7
PEG (NY)N/A
PEG (5Y)2.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.64% | ||
| ROE | 9.61% | ||
| ROCE | 5.49% | ||
| ROIC | 4.34% | ||
| ROICexc | 4.44% | ||
| ROICexgc | 4.47% | ||
| OM | 50.18% | ||
| PM (TTM) | 43.5% | ||
| GM | 51.67% | ||
| FCFM | N/A |
ROA(3y)4.82%
ROA(5y)4.99%
ROE(3y)10.42%
ROE(5y)11.14%
ROIC(3y)4.28%
ROIC(5y)4%
ROICexc(3y)4.37%
ROICexc(5y)4.08%
ROICexgc(3y)4.39%
ROICexgc(5y)4.1%
ROCE(3y)5.42%
ROCE(5y)5.06%
ROICexcg growth 3Y12.39%
ROICexcg growth 5Y-0.77%
ROICexc growth 3Y12.35%
ROICexc growth 5Y-0.78%
OM growth 3Y5.28%
OM growth 5Y-1.82%
PM growth 3Y-16.07%
PM growth 5Y-0.39%
GM growth 3Y4.55%
GM growth 5Y-1.61%
F-Score2
Asset Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.02 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.24 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 | ||
| Altman-Z | 0.98 |
F-Score2
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-6.28%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-15.25%
EPS Next Y-11.06%
EPS Next 2Y-6.67%
EPS Next 3Y-4.81%
EPS Next 5YN/A
Revenue 1Y (TTM)12.01%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
Revenue Next Year-0.06%
Revenue Next 2Y2.69%
Revenue Next 3Y4.01%
Revenue Next 5YN/A
EBIT growth 1Y16.8%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-148.55%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-148.55%
OCF growth 3YN/A
OCF growth 5YN/A