ARES CAPITAL CORP (ARCC) Stock Fundamental Analysis
NASDAQ:ARCC - Nasdaq - US04010L1035 - Common Stock - Currency: USD
Overall ARCC gets a fundamental rating of 4 out of 10. We evaluated ARCC against 229 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 not valued too expensively and it also shows a decent growth rate.
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.
In the past 5 years ARCC has always been profitable.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
The Return On Assets of ARCC (5.39%) is better than 69.00% of its industry peers.
ARCC's Return On Equity of 11.40% is fine compared to the rest of the industry. ARCC outperforms 61.14% of its industry peers.
ARCC's Return On Invested Capital of 4.30% is in line compared to the rest of the industry. ARCC outperforms 56.33% of its industry peers.
ARCC had an Average Return On Invested Capital over the past 3 years of 4.28%. This is below the industry average of 7.23%.
The last Return On Invested Capital (4.30%) for ARCC is above the 3 year average (4.28%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.39% | ||
| ROE | 11.4% | ||
| ROIC | 4.3% |
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
The Profit Margin of ARCC (50.90%) is better than 87.77% of its industry peers.
ARCC's Profit Margin has been stable in the last couple of years.
The Operating Margin of ARCC (49.36%) is better than 88.21% of its industry peers.
In the last couple of years the Operating Margin of ARCC has declined.
With a Gross Margin value of 50.80%, ARCC perfoms like the industry average, outperforming 58.95% of the companies in the same industry.
In the last couple of years the Gross Margin of ARCC has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 49.36% | ||
| PM (TTM) | 50.9% | ||
| GM | 50.8% |
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.
Compared to 5 years ago, ARCC has more shares outstanding
Compared to 1 year ago, ARCC has an improved debt to assets ratio.
2.2 Solvency
ARCC has an Altman-Z score of 0.93. This is a bad value and indicates that ARCC is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.93, ARCC is in line with its industry, outperforming 49.78% of the companies in the same industry.
A Debt/Equity ratio of 1.03 is on the high side and indicates that ARCC has dependencies on debt financing.
ARCC's Debt to Equity ratio of 1.03 is in line compared to the rest of the industry. ARCC outperforms 54.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.03 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.93 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 1.01 indicates that ARCC should not have too much problems paying its short term obligations.
The Current ratio of ARCC (1.01) is comparable to the rest of the industry.
A Quick Ratio of 1.01 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC has a Quick ratio of 1.01. This is comparable to the rest of the industry: ARCC outperforms 47.60% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
ARCC shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.28%.
Measured over the past 5 years, ARCC shows a small growth in Earnings Per Share. The EPS has been growing by 4.06% on average per year.
The Revenue has grown by 14.38% in the past year. This is quite good.
The Revenue has been growing by 14.37% on average over the past years. This is quite good.
EPS 1Y (TTM)-6.28%
EPS 3Y5.05%
EPS 5Y4.06%
EPS Q2Q%-15.25%
Revenue 1Y (TTM)14.38%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
3.2 Future
The Earnings Per Share is expected to decrease by -3.00% on average over the next years.
The Revenue is expected to grow by 10.95% on average over the next years. This is quite good.
EPS Next Y-5.26%
EPS Next 2Y-3.55%
EPS Next 3Y-3%
EPS Next 5YN/A
Revenue Next Year5.19%
Revenue Next 2Y5.49%
Revenue Next 3Y10.95%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 9.72, the valuation of ARCC can be described as reasonable.
Based on the Price/Earnings ratio, ARCC is valued a bit cheaper than 71.62% of the companies in the same industry.
ARCC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.95.
The Price/Forward Earnings ratio is 10.05, which indicates a very decent valuation of ARCC.
69.00% of the companies in the same industry are more expensive than ARCC, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of ARCC to the average of the S&P500 Index (20.99), we can say ARCC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.72 | ||
| Fwd PE | 10.05 |
4.2 Price Multiples
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
ARCC's earnings are expected to decrease with -3.00% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.4
EPS Next 2Y-3.55%
EPS Next 3Y-3%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 9.14%, ARCC is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 8.40, ARCC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.41, ARCC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.14% |
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 Years3
Div Non Decr Years4
5.3 Sustainability
ARCC pays out 74.84% of its income as dividend. This is not a sustainable payout ratio.
ARCC's earnings are declining while the Dividend Rate has been growing. This means the dividend growth is most likely not sustainable.
DP74.84%
EPS Next 2Y-3.55%
EPS Next 3Y-3%
21.78
+0.19 (+0.88%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners30.49%
Inst Owner Change1.21%
Ins Owners0.49%
Ins Owner Change-7.9%
Market Cap15.02B
Analysts83
Price Target23.09 (6.01%)
Short Float %2.65%
Short Ratio3.11
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.14% |
Yearly Dividend1.82
Dividend Growth(5Y)2.32%
DP74.84%
Div Incr Years3
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-5.56%
Min EPS beat(2)-6.69%
Max EPS beat(2)-4.43%
EPS beat(4)1
Avg EPS beat(4)-2.8%
Min EPS beat(4)-6.69%
Max EPS beat(4)2.86%
EPS beat(8)3
Avg EPS beat(8)-1.67%
EPS beat(12)5
Avg EPS beat(12)-1.13%
EPS beat(16)8
Avg EPS beat(16)1.72%
Revenue beat(2)0
Avg Revenue beat(2)-3.56%
Min Revenue beat(2)-5.25%
Max Revenue beat(2)-1.87%
Revenue beat(4)1
Avg Revenue beat(4)-1.37%
Min Revenue beat(4)-5.25%
Max Revenue beat(4)3.48%
Revenue beat(8)2
Avg Revenue beat(8)0.12%
Revenue beat(12)5
Avg Revenue beat(12)0.25%
Revenue beat(16)8
Avg Revenue beat(16)2.05%
PT rev (1m)-2.99%
PT rev (3m)-0.03%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-3.13%
EPS NY rev (1m)-0.12%
EPS NY rev (3m)-2.06%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.01%
Revenue NY rev (1m)-3.3%
Revenue NY rev (3m)1.41%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.72 | ||
| Fwd PE | 10.05 | ||
| P/S | 5.02 | ||
| P/FCF | N/A | ||
| P/OCF | N/A | ||
| P/B | 1.12 | ||
| P/tB | 1.12 | ||
| EV/EBITDA | N/A |
EPS(TTM)2.24
EY10.28%
EPS(NY)2.17
Fwd EY9.95%
FCF(TTM)-3.09
FCFYN/A
OCF(TTM)-3.09
OCFYN/A
SpS4.34
BVpS19.37
TBVpS19.37
PEG (NY)N/A
PEG (5Y)2.4
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.39% | ||
| ROE | 11.4% | ||
| ROCE | 5.44% | ||
| ROIC | 4.3% | ||
| ROICexc | 4.4% | ||
| ROICexgc | 4.43% | ||
| OM | 49.36% | ||
| PM (TTM) | 50.9% | ||
| GM | 50.8% | ||
| 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 | 1.03 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 2.18 | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z | 0.93 |
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-5.26%
EPS Next 2Y-3.55%
EPS Next 3Y-3%
EPS Next 5YN/A
Revenue 1Y (TTM)14.38%
Revenue growth 3Y18%
Revenue growth 5Y14.37%
Sales Q2Q%4.42%
Revenue Next Year5.19%
Revenue Next 2Y5.49%
Revenue Next 3Y10.95%
Revenue Next 5YN/A
EBIT growth 1Y14.77%
EBIT growth 3Y24.22%
EBIT growth 5Y12.28%
EBIT Next Year-98.78%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-516.44%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-516.44%
OCF growth 3YN/A
OCF growth 5YN/A