ARES MANAGEMENT CORP - A (ARES) Stock Fundamental Analysis
NYSE:ARES - New York Stock Exchange, Inc. - US03990B1017 - Common Stock - Currency: USD
Overall ARES gets a fundamental rating of 4 out of 10. We evaluated ARES against 230 industry peers in the Capital Markets industry. There are concerns on the financial health of ARES while its profitability can be described as average. ARES is valued quite expensively, but it does show have an excellent growth rating.
1. Profitability
1.1 Basic Checks
In the past year ARES was profitable.
ARES had a positive operating cash flow in the past year.
In the past 5 years ARES has always been profitable.
ARES had negative operating cash flow in 4 of the past 5 years.
1.2 Ratios
With a Return On Assets value of 1.65%, ARES is not doing good in the industry: 60.43% of the companies in the same industry are doing better.
With a decent Return On Equity value of 11.58%, ARES is doing good in the industry, outperforming 61.74% of the companies in the same industry.
With a Return On Invested Capital value of 4.34%, ARES perfoms like the industry average, outperforming 57.39% of the companies in the same industry.
ARES had an Average Return On Invested Capital over the past 3 years of 3.87%. This is below the industry average of 7.09%.
The 3 year average ROIC (3.87%) for ARES is below the current ROIC(4.34%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.65% | ||
| ROE | 11.58% | ||
| ROIC | 4.34% |
ROA(3y)1.39%
ROA(5y)1.33%
ROE(3y)15.05%
ROE(5y)15.08%
ROIC(3y)3.87%
ROIC(5y)3.61%
1.3 Margins
ARES has a Profit Margin of 10.56%. This is in the lower half of the industry: ARES underperforms 61.30% of its industry peers.
ARES's Profit Margin has improved in the last couple of years.
ARES has a Operating Margin (25.56%) which is in line with its industry peers.
ARES's Operating Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.56% | ||
| PM (TTM) | 10.56% | ||
| GM | N/A |
OM growth 3Y7.41%
OM growth 5Y8.32%
PM growth 3Y6.46%
PM growth 5Y9.3%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
ARES has more shares outstanding than it did 1 year ago.
The number of shares outstanding for ARES has been increased compared to 5 years ago.
Compared to 1 year ago, ARES has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.54, we must say that ARES is in the distress zone and has some risk of bankruptcy.
ARES has a Altman-Z score of 1.54. This is in the better half of the industry: ARES outperforms 65.22% of its industry peers.
The Debt to FCF ratio of ARES is 4.63, which is a neutral value as it means it would take ARES, 4.63 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.63, ARES is in the better half of the industry, outperforming 66.96% of the companies in the same industry.
ARES has a Debt/Equity ratio of 3.53. This is a high value indicating a heavy dependency on external financing.
ARES's Debt to Equity ratio of 3.53 is on the low side compared to the rest of the industry. ARES is outperformed by 82.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.53 | ||
| Debt/FCF | 4.63 | ||
| Altman-Z | 1.54 |
ROIC/WACCN/A
WACCN/A
2.3 Liquidity
A Current Ratio of 0.60 indicates that ARES may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.60, ARES is doing worse than 71.30% of the companies in the same industry.
ARES has a Quick Ratio of 0.60. This is a bad value and indicates that ARES is not financially healthy enough and could expect problems in meeting its short term obligations.
ARES has a Quick ratio of 0.60. This is in the lower half of the industry: ARES underperforms 71.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.6 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 8.77% over the past year.
Measured over the past years, ARES shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.77% on average per year.
ARES shows a small growth in Revenue. In the last year, the Revenue has grown by 6.96%.
ARES shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 17.09% yearly.
EPS 1Y (TTM)8.77%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%1.65%
Revenue 1Y (TTM)6.96%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%19.45%
3.2 Future
ARES is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 24.15% yearly.
Based on estimates for the next years, ARES will show a very strong growth in Revenue. The Revenue will grow by 26.61% on average per year.
EPS Next Y29.14%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
EPS Next 5YN/A
Revenue Next Year31.05%
Revenue Next 2Y27.48%
Revenue Next 3Y26.61%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
ARES is valuated quite expensively with a Price/Earnings ratio of 38.36.
Based on the Price/Earnings ratio, ARES is valued a bit more expensive than the industry average as 75.65% of the companies are valued more cheaply.
ARES is valuated rather expensively when we compare the Price/Earnings ratio to 27.85, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 29.70 indicates a quite expensive valuation of ARES.
ARES's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. ARES is more expensive than 72.17% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ARES to the average of the S&P500 Index (20.77), we can say ARES is valued slightly more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.36 | ||
| Fwd PE | 29.7 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ARES is valued a bit cheaper than 63.48% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ARES indicates a somewhat cheap valuation: ARES is cheaper than 61.30% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.42 | ||
| EV/EBITDA | 51.66 |
4.3 Compensation for Growth
ARES's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ARES's earnings are expected to grow with 24.15% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.32
PEG (5Y)2.04
EPS Next 2Y28.68%
EPS Next 3Y24.15%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.93%, ARES has a reasonable but not impressive dividend return.
The stock price of ARES dropped by -23.18% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
ARES's Dividend Yield is comparable with the industry average which is at 8.31.
Compared to an average S&P500 Dividend Yield of 2.45, ARES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.93% |
5.2 History
The dividend of ARES has a limited annual growth rate of 5.82%.
ARES has paid a dividend for at least 10 years, which is a reliable track record.
As ARES did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)5.82%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
319.58% of the earnings are spent on dividend by ARES. This is not a sustainable payout ratio.
ARES's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP319.58%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
152.27
-0.26 (-0.17%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryCapital Markets
Earnings (Last)
Earnings (Next)
Inst Owners85.3%
Inst Owner Change-0.18%
Ins Owners3.33%
Ins Owner Change-3.3%
Market Cap49.73B
Analysts77.39
Price Target168.44 (10.62%)
Short Float %3.43%
Short Ratio2.92
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.93% |
Yearly Dividend4.22
Dividend Growth(5Y)5.82%
DP319.58%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-4.19%
Min EPS beat(2)-7.09%
Max EPS beat(2)-1.29%
EPS beat(4)0
Avg EPS beat(4)-6.07%
Min EPS beat(4)-14.66%
Max EPS beat(4)-1.26%
EPS beat(8)2
Avg EPS beat(8)-4.12%
EPS beat(12)4
Avg EPS beat(12)-1.84%
EPS beat(16)6
Avg EPS beat(16)0.33%
Revenue beat(2)2
Avg Revenue beat(2)22.25%
Min Revenue beat(2)6.42%
Max Revenue beat(2)38.08%
Revenue beat(4)2
Avg Revenue beat(4)7.41%
Min Revenue beat(4)-10.28%
Max Revenue beat(4)38.08%
Revenue beat(8)5
Avg Revenue beat(8)13.57%
Revenue beat(12)7
Avg Revenue beat(12)12.05%
Revenue beat(16)11
Avg Revenue beat(16)33.88%
PT rev (1m)-17.78%
PT rev (3m)-9.69%
EPS NQ rev (1m)-3.27%
EPS NQ rev (3m)-10.76%
EPS NY rev (1m)-3.9%
EPS NY rev (3m)-10.32%
Revenue NQ rev (1m)0.13%
Revenue NQ rev (3m)-0.28%
Revenue NY rev (1m)-1.39%
Revenue NY rev (3m)-2.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.36 | ||
| Fwd PE | 29.7 | ||
| P/S | 12.8 | ||
| P/FCF | 18.42 | ||
| P/OCF | 17.82 | ||
| P/B | 14.03 | ||
| P/tB | 35.39 | ||
| EV/EBITDA | 51.66 |
EPS(TTM)3.97
EY2.61%
EPS(NY)5.13
Fwd EY3.37%
FCF(TTM)8.27
FCFY5.43%
OCF(TTM)8.55
OCFY5.61%
SpS11.89
BVpS10.85
TBVpS4.3
PEG (NY)1.32
PEG (5Y)2.04
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.65% | ||
| ROE | 11.58% | ||
| ROCE | 4.99% | ||
| ROIC | 4.34% | ||
| ROICexc | 5.04% | ||
| ROICexgc | 6.06% | ||
| OM | 25.56% | ||
| PM (TTM) | 10.56% | ||
| GM | N/A | ||
| FCFM | 69.49% |
ROA(3y)1.39%
ROA(5y)1.33%
ROE(3y)15.05%
ROE(5y)15.08%
ROIC(3y)3.87%
ROIC(5y)3.61%
ROICexc(3y)4.28%
ROICexc(5y)3.97%
ROICexgc(3y)4.93%
ROICexgc(5y)4.55%
ROCE(3y)4.44%
ROCE(5y)4.15%
ROICexcg growth 3Y1.38%
ROICexcg growth 5Y15.46%
ROICexc growth 3Y1.72%
ROICexc growth 5Y12.7%
OM growth 3Y7.41%
OM growth 5Y8.32%
PM growth 3Y6.46%
PM growth 5Y9.3%
GM growth 3YN/A
GM growth 5YN/A
F-Score6
Asset Turnover0.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.53 | ||
| Debt/FCF | 4.63 | ||
| Debt/EBITDA | 10.86 | ||
| Cap/Depr | 57.71% | ||
| Cap/Sales | 2.36% | ||
| Interest Coverage | 1.15 | ||
| Cash Conversion | 242.35% | ||
| Profit Quality | 658.14% | ||
| Current Ratio | 0.6 | ||
| Quick Ratio | 0.6 | ||
| Altman-Z | 1.54 |
F-Score6
WACCN/A
ROIC/WACCN/A
Cap/Depr(3y)32.4%
Cap/Depr(5y)31.96%
Cap/Sales(3y)1.79%
Cap/Sales(5y)1.38%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)8.77%
EPS 3Y15.6%
EPS 5Y18.77%
EPS Q2Q%1.65%
EPS Next Y29.14%
EPS Next 2Y28.68%
EPS Next 3Y24.15%
EPS Next 5YN/A
Revenue 1Y (TTM)6.96%
Revenue growth 3Y-2.66%
Revenue growth 5Y17.09%
Sales Q2Q%19.45%
Revenue Next Year31.05%
Revenue Next 2Y27.48%
Revenue Next 3Y26.61%
Revenue Next 5YN/A
EBIT growth 1Y7.95%
EBIT growth 3Y4.56%
EBIT growth 5Y26.83%
EBIT Next Year58.97%
EBIT Next 3Y33.91%
EBIT Next 5YN/A
FCF growth 1Y998.55%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y1296.58%
OCF growth 3YN/A
OCF growth 5YN/A