ARES CAPITAL CORP (ARCC)
US04010L1035 - Common Stock
Taking everything into account, ARCC scores 5 out of 10 in our fundamental rating. ARCC was compared to 206 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. ARCC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year ARCC was profitable.
ARCC had a positive operating cash flow in the past year.
Each year in the past 5 years ARCC has been profitable.
In the past 5 years ARCC reported 4 times negative operating cash flow.
1.2 Ratios
The Return On Assets of ARCC (5.60%) is better than 69.46% of its industry peers.
The Return On Equity of ARCC (11.86%) is better than 67.49% of its industry peers.
ARCC has a Return On Invested Capital (4.59%) which is in line with its industry peers.
ARCC had an Average Return On Invested Capital over the past 3 years of 3.77%. This is significantly below the industry average of 9.54%.
The 3 year average ROIC (3.77%) for ARCC is below the current ROIC(4.59%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.6% | ||
| ROE | 11.86% | ||
| ROIC | 4.59% |
ROA(3y)4.4%
ROA(5y)5.03%
ROE(3y)10.23%
ROE(5y)10.61%
ROIC(3y)3.77%
ROIC(5y)4.06%
1.3 Margins
The Profit Margin of ARCC (50.37%) is better than 88.67% of its industry peers.
In the last couple of years the Profit Margin of ARCC has declined.
ARCC has a Operating Margin of 51.00%. This is amongst the best in the industry. ARCC outperforms 88.67% of its industry peers.
ARCC's Operating Margin has improved in the last couple of years.
ARCC has a Gross Margin of 52.65%. This is comparable to the rest of the industry: ARCC outperforms 51.72% of its industry peers.
In the last couple of years the Gross Margin of ARCC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 51% | ||
| PM (TTM) | 50.37% | ||
| GM | 52.65% |
OM growth 3Y0.37%
OM growth 5Y3.67%
PM growth 3Y-17.99%
PM growth 5Y-13.02%
GM growth 3Y0.86%
GM growth 5Y2.17%
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 a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.90, we must say that ARCC is in the distress zone and has some risk of bankruptcy.
ARCC has a Altman-Z score (0.90) which is comparable to the rest of the industry.
The Debt to FCF ratio of ARCC is 22.65, which is on the high side as it means it would take ARCC, 22.65 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 22.65, ARCC is in line with its industry, outperforming 47.29% of the companies in the same industry.
ARCC has a Debt/Equity ratio of 1.07. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ARCC (1.07) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.07 | ||
| Debt/FCF | 22.65 | ||
| Altman-Z | 0.9 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
ARCC has a Current Ratio of 1.42. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of ARCC (1.42) is comparable to the rest of the industry.
ARCC has a Quick Ratio of 1.42. This is a normal value and indicates that ARCC is financially healthy and should not expect problems in meeting its short term obligations.
ARCC's Quick ratio of 1.42 is in line compared to the rest of the industry. ARCC outperforms 57.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.42 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.92% over the past year.
ARCC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.50% yearly.
ARCC shows a strong growth in Revenue. In the last year, the Revenue has grown by 28.31%.
ARCC shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.56% yearly.
EPS 1Y (TTM)20.92%
EPS 3Y1.72%
EPS 5Y7.5%
EPS growth Q2Q18%
Revenue 1Y (TTM)28.31%
Revenue growth 3Y11.11%
Revenue growth 5Y12.56%
Revenue growth Q2Q21.97%
3.2 Future
The Earnings Per Share is expected to grow by 3.51% on average over the next years.
The Revenue is expected to grow by 9.80% on average over the next years. This is quite good.
EPS Next Y18.95%
EPS Next 2Y8.82%
EPS Next 3Y3.51%
EPS Next 5YN/A
Revenue Next Year27.22%
Revenue Next 2Y16.12%
Revenue Next 3Y9.8%
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
A Price/Earnings ratio of 8.46 indicates a reasonable valuation of ARCC.
Compared to the rest of the industry, the Price/Earnings ratio of ARCC indicates a somewhat cheap valuation: ARCC is cheaper than 76.85% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 24.54. ARCC is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 8.43, which indicates a very decent valuation of ARCC.
72.91% 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 (20.22), we can say ARCC is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.46 | ||
| Fwd PE | 8.43 |
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 | 22.4 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ARCC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)0.45
PEG (5Y)1.13
EPS Next 2Y8.82%
EPS Next 3Y3.51%
5. Dividend
5.1 Amount
ARCC has a Yearly Dividend Yield of 9.63%, which is a nice return.
ARCC's Dividend Yield is a higher than the industry average which is at 7.71.
ARCC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.55.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.63% |
5.2 History
The dividend of ARCC has a limited annual growth rate of 1.27%.
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)1.27%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
ARCC pays out 79.11% of its income as dividend. This is not a sustainable payout ratio.
The dividend of ARCC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP79.11%
EPS Next 2Y8.82%
EPS Next 3Y3.51%
ARES CAPITAL CORP
NASDAQ:ARCC (12/11/2023, 3:46:55 PM)
After market: 20.1 +0.04 (+0.2%)20.06
-0.02 (-0.1%)
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 Cap11.42B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 9.63% |
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)
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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 | 8.46 | ||
| Fwd PE | 8.43 | ||
| 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)0.45
PEG (5Y)1.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.6% | ||
| ROE | 11.86% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 51% | ||
| PM (TTM) | 50.37% | ||
| GM | 52.65% | ||
| 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 | 1.07 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.42 | ||
| 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)20.92%
EPS 3Y1.72%
EPS 5Y
EPS growth Q2Q
EPS Next Y18.95%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)28.31%
Revenue growth 3Y11.11%
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