Ares Capital (ARCC) AI Stock Analysis

• Market Cap: $14.38B
• Dividend Yield: 9.53%
• Average Volume (3M): 4.50M
• Price to Earnings (P/E): 9.9
• Beta (1Y): 0.57
• Revenue Growth: 7.71%
• EPS Growth: -29.47%
• Country: US
• Employees: 1,200
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.50
• Shares Outstanding: 705,367,430
• 10 Day Avg. Volume: 6,012,082
• 30 Day Avg. Volume: 4,501,586
• PEG Ratio: -0.49
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 8.00
• P/FCF Ratio: 10.65
• Enterprise Value/Market Cap: 2.00
• Enterprise Value/Revenue: 12.18
• Enterprise Value/Gross Profit: 19.78
• Enterprise Value/Ebitda: 15.39
• 1Y Price Target: $23.05
• Price Target Upside: 14.39% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

• Rating: 75 Outperform
• Price Target: $25.00 ▲(24.07% Upside)

Ares Capital's strong earnings call and attractive valuation are significant positives, outweighing concerns about inconsistent revenue growth and cash flow challenges. Technical indicators are neutral, providing a balanced outlook.

Positive Factors

Strong Liquidity Position

Ares Capital's robust liquidity of $6.5 billion enhances its ability to invest in new opportunities and manage financial obligations, supporting long-term stability.

Increase in Net Asset Value

The increase in net asset value reflects strong portfolio performance and effective management, indicating potential for sustained shareholder returns.

Strong Portfolio Performance

Accelerating EBITDA growth rates among borrowers signal a healthy portfolio, suggesting ARCC's investments are yielding strong returns and supporting future growth.

Negative Factors

Inconsistent Revenue Growth

Inconsistent revenue growth can challenge ARCC's ability to maintain stable cash flows and may impact long-term financial planning and investment strategies.

Negative Free Cash Flow

Negative free cash flow suggests potential issues in cash management and operational efficiency, which could hinder ARCC's ability to reinvest and grow.

Modest Uptick in Non-Accruals

An increase in non-accruals indicates rising credit risk, which could affect ARCC's portfolio quality and future earnings if not managed effectively.

Ares Capital Business Overview & Revenue Model

Company Description

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.

How the Company Makes Money

Ares Capital generates revenue primarily through interest income from its investment portfolio, which includes loans and debt securities issued to middle-market companies. The company earns interest on the loans it provides, which typically feature higher interest rates compared to traditional bank loans due to the additional risk associated with lending to middle-market businesses. In addition to interest income, ARCC also gains revenue from fees associated with the origination, structuring, and management of these investments. The company may also realize capital gains from equity investments when it exits these positions. Significant partnerships with private equity firms and other financial institutions can enhance ARCC's deal flow and provide opportunities for co-investments, further contributing to its revenue streams.

Ares Capital Financial Statement Overview

Summary

Ares Capital shows strong profitability and a stable balance sheet with a high equity ratio and no debt. However, inconsistent revenue growth and negative free cash flow present concerns.

Income Statement

Ares Capital has shown strong profitability with a high EBIT margin consistently over the years, peaking at 92.4% in 2023. However, revenue growth has been inconsistent, with a notable decline in 2024. The company maintains solid net profit margins, indicating efficient cost management.

Balance Sheet

The balance sheet indicates a robust equity position with a high equity ratio of 47.3% in 2024 and no debts recorded, showing financial stability. Return on equity has been strong, though it decreased in 2024 compared to 2023, suggesting a lower return on equity investment.

Cash Flow

Cash flow analysis reveals challenges with negative free cash flow in recent years, despite significant positive operating cash flow in 2023. The variability in cash flows indicates potential risks in cash management and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.36B	1.71B	1.64B	741.00M	1.68B	541.00M
Gross Profit	1.45B	940.00M	1.73B	741.00M	1.82B	185.00M
EBITDA	1.86B	2.32B	2.12B	1.16B	1.60B	823.00M
Net Income	1.46B	1.52B	1.52B	600.00M	1.57B	484.00M
Balance Sheet
Total Assets	29.07B	28.25B	23.80B	22.40B	20.84B	16.20B
Cash, Cash Equivalents and Short-Term Investments	447.00M	635.00M	535.00M	303.00M	372.00M	254.00M
Total Debt	0.00	13.76B	11.94B	12.32B	11.14B	8.55B
Total Liabilities	15.04B	14.90B	12.60B	12.84B	11.97B	9.02B
Stockholders Equity	14.03B	13.36B	11.20B	9.55B	8.87B	7.18B
Cash Flow
Free Cash Flow	1.28B	1.28B	1.00B	746.00M	935.00M	734.00M
Operating Cash Flow	1.28B	1.28B	1.00B	746.00M	935.00M	734.00M
Investing Cash Flow	-2.58B	-3.41B	-489.00M	-2.10B	-3.39B	-1.29B
Financing Cash Flow	1.29B	2.42B	-284.00M	1.21B	2.62B	707.00M

Ares Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCC, the sentiment is Negative. The current price of 20.15 is below the 20-day moving average (MA) of 21.03, below the 50-day MA of 21.59, and below the 200-day MA of 21.14, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 30.46 is Neutral, neither overbought nor oversold. The STOCH value of 19.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARCC.

Ares Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	75 Outperform	$14.38B	9.86	10.25%	9.53%	7.71%	-29.47%
MAIN	74 Outperform	$5.62B	10.35	19.65%	6.17%	28.32%	13.63%
GBDC	71 Outperform	$3.66B	9.71	9.33%	11.93%	32.19%	-13.72%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TPG	63 Neutral	$21.30B	―	2.55%	3.26%	43.48%	-24.02%
FSK	58 Neutral	$4.29B	19.04	3.39%	18.72%	-8.32%	-65.56%
HTGC	57 Neutral	$3.41B	12.34	12.81%	10.27%	-15.88%	-13.91%

Ares Capital Corporate Events

Ares Capital Issues $650M Notes for Debt Repayment

On September 9, 2025, Ares Capital Corporation entered into a Fourth Supplemental Indenture with U.S. Bank Trust Company to issue $650 million in 5.100% notes due 2031. The proceeds from this issuance are intended to repay existing debt, with the potential for reborrowing for general corporate purposes, including investments in portfolio companies. The transaction also involved a forward-starting interest rate swap to transition from a fixed to a floating interest rate, effective from July 15, 2026.

The most recent analyst rating on (ARCC) stock is a Buy with a $25.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.

Ares Capital Approves Share Issuance Below Net Asset Value

On August 8, 2025, Ares Capital Corporation held a special meeting of stockholders where a proposal was approved to allow the company to sell or issue shares of its common stock at a price below its current net asset value per share, subject to certain limitations. This authorization, which includes a cap that the number of shares issued does not exceed 25% of its outstanding shares, will be effective for a twelve-month period ending on August 8, 2026.

The most recent analyst rating on (ARCC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Ares Capital stock, see the ARCC Stock Forecast page.