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Ares Capital
(NASDAQ:ARCC)
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Rating:73Outperform
Price Target:
$22.00
â–²(10.39% Upside)
Action:Reiterated
Date:09/16/26
ARCC scores well overall on strong profitability and cash conversion, plus supportive earnings-call commentary around dividend durability, liquidity, and funding improvements. Valuation is also favorable due to the high dividend yield with a reasonable P/E. The score is held back by leverage/credit risk considerations (including a modest rise in non-accruals), some volatility in historical growth, and only moderate technical momentum.
Positive Factors
Diversified private-credit portfolio
Broad diversification reduces the impact of any single borrower, industry, or investment weakness on portfolio income and asset value. The large number of exposures and low concentration provide a durable foundation for ARCC’s direct-lending model and support more resilient credit performance over coming quarters.
Negative Factors
Rising non-accruals
The increase in non-accruals signals some deterioration in borrower credit quality and raises the risk of lost interest income, restructurings, or realized losses. Although the level remains below ARCC’s historical average, continued deterioration could pressure earnings, NAV, and dividend coverage.
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Positive Factors
Negative Factors
Diversified private-credit portfolio
Broad diversification reduces the impact of any single borrower, industry, or investment weakness on portfolio income and asset value. The large number of exposures and low concentration provide a durable foundation for ARCC’s direct-lending model and support more resilient credit performance over coming quarters.
Read all positive factors
Ares Capital (ARCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.90B
Dividend Yield9.92%
Average Volume (3M)4.03M
Price to Earnings (P/E)14.4
Beta (1Y)0.75
Revenue Growth10.38%
EPS Growth-34.10%
CountryUS
Employees4,250
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)1.35
Shares Outstanding718,022,800
10 Day Avg. Volume4,688,773
30 Day Avg. Volume4,028,189
Financial Highlights & Ratios
PEG Ratio-0.46
Price to Book (P/B)0.99
Price to Sales (P/S)6.31
P/FCF Ratio12.38
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$20.21Price Target Upside1.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)1.91
Revenue Forecast (FY)$3.09B
Ares Capital Business Overview & Revenue Model
Company Description
Ares Capital Corporation (ARCC) operates as a Business Development Company (BDC), delivering diverse financing solutions predominantly to middle-market enterprises. The firm's expertise lies in facilitating various corporate actions, including fun...
How the Company Makes Money
ARCC makes money primarily from investment income generated by its portfolio of debt and equity investments. The largest revenue stream is interest income on loans it holds (including cash-pay interest and, where applicable, payment-in-kind (PIK) ...
Ares Capital Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 27, 2026
Earnings Call Sentiment Positive
The call conveyed a generally constructive tone: core earnings were stable, liquidity and balance sheet metrics remained strong, funding efficiency initiatives (including a commercial paper program and securitization repricing) should lower costs, portfolio fundamentals (diversification, EBITDA growth, equity cushions) are healthy, and origination pipeline momentum accelerated late in the quarter. Headwinds included modest NAV and fair-value declines driven by mark-to-market adjustments, a small increase in non-accruals, and a temporarily muted deal flow and lower closing ratio amid macro uncertainty. On balance, the positive operational and balance-sheet developments outweigh the limited near-term credit and valuation headwinds.Positive Updates
Stable Core Earnings and Return on Equity
Core earnings of $0.47 per share in Q2 2026, consistent with the prior quarter, representing an annualized return on equity of 9.7%.
Negative Updates
Modest NAV and Portfolio Fair Value Declines
Net asset value ended the quarter at $13.9 billion or $19.35 per share, a decline of $0.24 per share (approximately -1.2% quarter-over-quarter). Total portfolio at fair value decreased from $29.5B to $29.3B (≈ -0.7%), primarily due to mark-to-market adjustments and net repayments.
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Q2-2026 Updates
Positive
Negative
Stable Core Earnings and Return on Equity
Core earnings of $0.47 per share in Q2 2026, consistent with the prior quarter, representing an annualized return on equity of 9.7%.
Read all positive updates
Company Guidance
Management's guidance emphasized maintaining a stable dividend and strong balance-sheet optionality while remaining selective in originations: core earnings of $0.47/share (annualized ROE 9.7%) and GAAP EPS $0.24 (vs $0.13), a Q3 regular dividend of $0.48/share payable Sept 30 (record Sept 15), and taxable spillover of ~$988M (~$1.38/share) to support future distributions; NAV was $13.9B ($19.35/share) with a portfolio of ~$29.3B fair value ($29.7B at cost) across 619 companies (no single investment >1.3%), weighted‑average LTM organic EBITDA growth ~8%, non‑accruals 2.4% (cost) / 1.4% (fair value), average loan‑to‑value mid‑40% (low‑40% for software), and 75% of Q2 transactions with incumbents. Balance‑sheet metrics: net leverage ~1.12x (target range 0.9x–1.25x), ~$6B available liquidity, $10.8B of fully committed revolvers (WAM >4 years), $1.2B of financing added in Q2 (including $800M unsecured notes and ~$370M revolver commitments), a new $1B commercial paper program (potentially 50–100 bps cheaper than average secured borrowings), repayment of $1B unsecured notes and only $1.4B of unsecured maturities in 2027—in sum, management expects relative stability in earnings/dividends, continued deployment from substantial dry powder, and a credit backdrop that should trend toward historical norms while they remain disciplined.Ares Capital Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
64
Positive
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.31B | 2.24B | 2.37B | 2.17B | 1.20B | 2.05B |
| Gross Profit | 1.55B | 1.51B | 1.71B | 1.64B | 741.00M | 1.68B |
| EBITDA | 1.63B | 1.40B | 1.59B | 1.54B | 655.00M | 1.60B |
| Net Income | 960.00M | 1.30B | 1.52B | 1.52B | 600.00M | 1.57B |
Balance Sheet | ||||||
| Total Assets | 30.50B | 31.23B | 28.25B | 23.80B | 22.40B | 20.84B |
| Cash, Cash Equivalents and Short-Term Investments | 383.00M | 924.00M | 635.00M | 535.00M | 303.00M | 372.00M |
| Total Debt | 15.77B | 15.99B | 13.76B | 11.95B | 12.38B | 11.16B |
| Total Liabilities | 16.61B | 16.92B | 14.90B | 12.60B | 12.84B | 11.97B |
| Stockholders Equity | 13.89B | 14.32B | 13.36B | 11.20B | 9.55B | 8.87B |
Cash Flow | ||||||
| Free Cash Flow | 1.06B | 1.14B | 1.28B | 1.00B | 746.00M | 935.00M |
| Operating Cash Flow | 1.06B | 1.14B | 1.28B | 1.00B | 746.00M | 935.00M |
| Investing Cash Flow | -1.74B | -2.86B | -3.41B | -489.00M | -2.10B | -3.39B |
| Financing Cash Flow | 640.00M | 1.78B | 2.42B | -284.00M | 1.21B | 2.62B |
Ares Capital Technical Analysis
Positive
19.93
Price Trends
19.16
Positive
18.58
Positive
18.32
Positive
Market Momentum
<0.01
Positive
52.78
Neutral
32.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCC, the sentiment is Positive. The current price of 19.93 is above the 20-day moving average (MA) of 19.34, above the 50-day MA of 19.16, and above the 200-day MA of 18.32, indicating a bullish trend. The MACD of <0.01 indicates Positive momentum. The RSI at 52.78 is Neutral, neither overbought nor oversold. The STOCH value of 32.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARCC.
Ares Capital Risk Analysis
Ares Capital disclosed 57 risk factors in its most recent earnings report. Ares Capital reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ares Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $5.23B | 11.33 | 14.81% | 7.72% | 3.49% | -18.26% | |
74 Outperform | $1.75B | 19.36 | 0.02% | 9.81% | -17.25% | -53.04% | |
73 Outperform | $13.90B | 14.41 | 6.78% | 9.92% | 10.38% | -34.10% | |
70 Outperform | $5.33B | 19.46 | 3.95% | 12.77% | 1.32% | -62.13% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
63 Neutral | $5.74B | 19.39 | 4.78% | 12.51% | -14.94% | -55.20% | |
60 Neutral | $3.07B | -8.31 | -6.65% | 18.36% | -35.39% | -272.02% |
* Financial Sector Average
ARCC
Ares Capital
19.10
0.89
4.86%
MAIN
Main Street Capital
55.05
-3.17
-5.44%
TSLX
Sixth Street Specialty Lending
18.02
-2.08
-10.35%
FSK
FS KKR Capital
10.99
-1.51
-12.07%
OBDC
Blue Owl Capital
10.49
-0.57
-5.16%
BXSL
Blackstone Secured Lending Fund
23.98
1.04
4.53%
Ares Capital Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Issues $750 Million Unsecured Notes Offering
Positive
Sep 15, 2026
On September 15, 2026 Ares Capital Corporation completed the issuance and sale of $750 million aggregate principal amount of 6.250% unsecured notes due 2033 under an existing indenture with U.S. Bank Trust Company, N.A. as trustee. The notes pay s...
Business Operations and StrategyPrivate Placements and FinancingShareholder Meetings
Ares Capital Stockholders Approve Below-NAV Share Issuance
Positive
Aug 14, 2026
On August 13, 2026, Ares Capital Corporation held a special meeting of stockholders to vote on a proposal affecting its capital-raising flexibility. The meeting covered 718,022,845 outstanding common shares eligible to vote, based on the record da...
DividendsFinancial Disclosures
Ares Capital Reports Q2 2026 Results, Declares Dividend
Neutral
Jul 29, 2026
On July 29, 2026, Ares Capital Corporation reported financial results for the second quarter ended June 30, 2026, showing GAAP net income of $171 million, or $0.24 per share, and net investment income of $359 million, or $0.50 per share. The firm&...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Resets and Extends Major CLO Financing
Positive
Jul 22, 2026
On July 17, 2026, Ares Direct Lending CLO 1 LLC, a wholly owned subsidiary of Ares Capital Corporation, refinanced its approximately $708.7 million term debt securitization via the ADL CLO 1 Reset Transaction, issuing new secured floating-rate not...
Business Operations and StrategyPrivate Placements and Financing
Ares Capital Expands BNP Funding Facility Commitments
Positive
Jun 22, 2026
On June 18, 2026, Ares Capital Corporation and its wholly owned subsidiary ARCC FB Funding LLC amended their Revolving Credit and Security Agreement with BNP Paribas, known as the BNP Funding Facility. The Tenth Amendment increased total commitmen...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.