ARES CAPITAL CORP (ARCC)
US04010L1035 - Common Stock
We assign a fundamental rating of 4 out of 10 to ARCC. ARCC was compared to 209 industry peers in the Capital Markets industry. While ARCC is still in line with the averages on profitability rating, there are concerns on its financial health. ARCC is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year ARCC was profitable.
In the past year ARCC had a positive cash flow from operations.
In the past 5 years ARCC has always been profitable.
ARCC had negative operating cash flow in 4 of the past 5 years.
1.2 Ratios
ARCC's Return On Assets of 6.39% is fine compared to the rest of the industry. ARCC outperforms 72.95% of its industry peers.
The Return On Equity of ARCC (13.59%) is better than 68.60% of its industry peers.
ARCC's Return On Invested Capital of 4.39% is in line compared to the rest of the industry. ARCC outperforms 54.11% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ARCC is below the industry average of 8.35%.
The 3 year average ROIC (3.86%) for ARCC is below the current ROIC(4.39%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.39% | ||
| ROE | 13.59% | ||
| ROIC | 4.39% |
ROA(3y)5.53%
ROA(5y)4.98%
ROE(3y)12.51%
ROE(5y)10.98%
ROIC(3y)3.86%
ROIC(5y)4.04%
1.3 Margins
With an excellent Profit Margin value of 58.22%, ARCC belongs to the best of the industry, outperforming 90.82% of the companies in the same industry.
ARCC's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 49.20%, ARCC belongs to the best of the industry, outperforming 82.13% of the companies in the same industry.
In the last couple of years the Operating Margin of ARCC has declined.
ARCC has a Gross Margin of 50.80%. This is comparable to the rest of the industry: ARCC outperforms 48.31% of its industry peers.
ARCC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 49.2% | ||
| PM (TTM) | 58.22% | ||
| GM | 50.8% |
OM growth 3Y-2.94%
OM growth 5Y-1.6%
PM growth 3Y22.04%
PM growth 5Y-1.93%
GM growth 3Y-3.38%
GM growth 5Y-1.02%
2. Health
2.1 Basic Checks
The number of shares outstanding for ARCC has been increased compared to 1 year ago.
The number of shares outstanding for ARCC has been increased compared to 5 years ago.
ARCC has a better debt/assets ratio than last year.
2.2 Solvency
ARCC has an Altman-Z score of 0.91. This is a bad value and indicates that ARCC is not financially healthy and even has some risk of bankruptcy.
ARCC has a Altman-Z score (0.91) which is in line with its industry peers.
The Debt to FCF ratio of ARCC is 23.32, which is on the high side as it means it would take ARCC, 23.32 years of fcf income to pay off all of its debts.
ARCC has a Debt to FCF ratio of 23.32. This is comparable to the rest of the industry: ARCC outperforms 44.44% of its industry peers.
ARCC has a Debt/Equity ratio of 1.06. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.06, ARCC perfoms like the industry average, outperforming 45.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | 23.32 | ||
| Altman-Z | 0.91 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 1.17 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC's Current ratio of 1.17 is in line compared to the rest of the industry. ARCC outperforms 51.69% of its industry peers.
A Quick Ratio of 1.17 indicates that ARCC should not have too much problems paying its short term obligations.
ARCC has a Quick ratio (1.17) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
ARCC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 17.91%, which is quite good.
The Earnings Per Share has been growing slightly by 7.12% on average over the past years.
The Revenue has grown by 24.71% in the past year. This is a very strong growth!
ARCC shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.35% yearly.
EPS 1Y (TTM)17.91%
EPS 3Y11.06%
EPS 5Y7.12%
EPS growth Q2Q0%
Revenue 1Y (TTM)24.71%
Revenue growth 3Y20.05%
Revenue growth 5Y14.35%
Revenue growth Q2Q10.47%
3.2 Future
Based on estimates for the next years, ARCC will show a decrease in Earnings Per Share. The EPS will decrease by -3.75% on average per year.
Based on estimates for the next years, ARCC will show a small growth in Revenue. The Revenue will grow by 2.62% on average per year.
EPS Next Y2.03%
EPS Next 2Y-2.06%
EPS Next 3Y-3.75%
EPS Next 5YN/A
Revenue Next Year8.53%
Revenue Next 2Y2.62%
Revenue Next 3YN/A
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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 8.58, the valuation of ARCC can be described as very reasonable.
Based on the Price/Earnings ratio, ARCC is valued a bit cheaper than the industry average as 75.85% of the companies are valued more expensively.
ARCC is valuated cheaply when we compare the Price/Earnings ratio to 24.83, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 8.41, the valuation of ARCC can be described as very reasonable.
ARCC's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ARCC is cheaper than 74.88% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.32, ARCC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.58 | ||
| Fwd PE | 8.41 |
4.2 Price Multiples
The rest of the industry has a similar Price/Free Cash Flow ratio as ARCC.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.14 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ARCC does not grow enough to justify the current Price/Earnings ratio.
A cheap valuation may be justified as ARCC's earnings are expected to decrease with -3.75% in the coming years.
PEG (NY)4.23
PEG (5Y)1.2
EPS Next 2Y-2.06%
EPS Next 3Y-3.75%
5. Dividend
5.1 Amount
ARCC has a Yearly Dividend Yield of 9.36%, which is a nice return.
Compared to an average industry Dividend Yield of 7.52, ARCC pays a bit more dividend than its industry peers.
ARCC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.36% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 3.99%.
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)3.99%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
ARCC pays out 67.74% 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.
DP67.74%
EPS Next 2Y-2.06%
EPS Next 3Y-3.75%
ARES CAPITAL CORP
NASDAQ:ARCC (4/17/2024, 7:00:00 PM)
After market: 20.36 +0.03 (+0.15%)20.33
+0.09 (+0.44%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap12.34B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.36% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.58 | ||
| Fwd PE | 8.41 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)4.23
PEG (5Y)1.2
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.39% | ||
| ROE | 13.59% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 49.2% | ||
| PM (TTM) | 58.22% | ||
| GM | 50.8% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.06 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.17 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)17.91%
EPS 3Y11.06%
EPS 5Y
EPS growth Q2Q
EPS Next Y2.03%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)24.71%
Revenue growth 3Y20.05%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y