Ares Capital (9A2) Q3 2026 Earnings Report
DE:9A2 Q3 2026 EPS Results
- Actual EPS
- EUR 0.41
- Consensus EPS
- EUR 0.42
- Beat/Miss
- Missed by -EUR 0.01
- One Year Ago EPS
- EUR 0.45
DE:9A2 Q3 2026 Revenue Results
- Actual Revenue
- EUR 633.92M
- Expected Revenue
- EUR 693.15M
- Beat/Miss
- Missed by -EUR 59.23M
- YoY Revenue Growth
- -30.19%
Earnings Announcement Details
- Quarter
- Q3 2026
- Date
- 10/27/2026
- Time
- Before Open
- Conference Call
- Tuesday, October 27, 2026
DE:9A2 Upcoming Earnings
Ares Capital's next earnings date is estimated for February 10, 2027, based on past reporting schedules.
Q3 2026 Earnings Call Audio
DE:9A2 Q3 2026 Earnings Call
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Q3 2026 Earnings Slide Deck
Q3 2026 Earnings Call Summary
Earnings Call Sentiment|Positive
The call was predominantly positive. ARCC reported solid earnings, stable credit performance, strong liquidity, improved funding costs, a durable dividend and a strategically attractive MFIC acquisition expected to be modestly accretive. The primary challenges were a slower and more selective origination environment, lower capital structuring fees, a slightly lower portfolio fair value and uncertainty around future MFIC asset marks. Highlights significantly outweighed lowlights.
Company Guidance
Management expects the MFIC transaction to be “modestly accretive to core earnings per share,” with accretion driven by the discount and higher yield on the assets and ARCC’s cost of capital advantages; ARCC expects to close the transaction in “5 or 6 months,” and said its $750 million upsized Wells Fargo-led funding commitment provides sufficient capacity without the need for additional debt capital. In the fourth quarter, ARCC has closed on $1.1 billion and its investment backlog stands at approximately $2.5 billion; every 100 basis point increase in base rates is expected to create about $0.02 per share of earnings tailwind per quarter, with changes typically taking about a quarter to be fully reflected in earnings. ARCC continues to believe its current regular dividend appropriately reflects the underlying earnings power, with the fourth quarter 2026 regular dividend of $0.48 per share payable on December 29, and is targeting leverage of 0.9x to 1.25x. Management said a 1% base rate increase is manageable, portfolio companies can handle “1% and more,” and any stress at the tail end would not be a meaningful contributor; 2028 maturities are about 10% and 2029 maturities are about 13% of the portfolio.
- Solid Quarterly Earnings and Return on EquityThird-quarter core earnings were $0.46 per share, representing an annualized return on equity of approximately 9.5%. GAAP net income per share was $0.44, up from $0.24 in the second quarter, primarily due to net unrealized appreciation from mark-to-market improvements on investments.
- MFIC Acquisition Expected to Be Accretive and Strategically ValuableARCC announced an agreement to acquire MidCap Financial Investment Corporation, or MFIC. The transaction is expected to be modestly accretive to core earnings per share from the outset, driven by the discount and higher yield on acquired assets and ARCC's cost-of-capital advantages. Management said the transaction is additive rather than transformative because of its size relative to ARCC.
- Meaningful Expansion of Portfolio and Sponsor RelationshipsThe MFIC transaction is expected to add over 200 incumbent positions, increasing ARCC's portfolio to over 800 portfolio companies and expanding the number of sponsors with which it has transacted to over 600. MFIC has 229 portfolio companies, with only 12 overlapping names, and its lower software allocation and higher healthcare allocation are expected to provide additional industry diversification.
- Acquisition Discount Concentrated in a Small Portion of AssetsManagement stated that the vast majority of the discount to NAV was concentrated in a small percentage of investments involving greater uncertainty of business outcomes and wider bid-ask spreads, while the portfolio was largely performing and ARCC saw relatively eye-to-eye on the marks for most assets. Cash consideration from Ares Management helped ARCC purchase the assets at a deeper discount while providing MFIC shareholders with a premium.
- Track Record of Value-Creating ConsolidationUpon closing MFIC, ARCC will have acquired all three of the largest BDCs in operation at the time of its IPO, including Allied Capital and American Capital. Management said both prior acquisitions generated internal rates of return in excess of 20% over the three years following their respective acquisitions.
- Strong Post-Quarter-End Investment BacklogARCC closed on $1.1 billion of investments in the fourth quarter to date, and its investment backlog stood at approximately $2.5 billion. Management described post-quarter-end originations and backlog together as historically strong levels that support its enthusiasm for a recovery in investing activity.
- High Transaction Review ActivityARCC reviewed more transactions in the third quarter than it did one year ago, and year-to-date transaction reviews were approximately 25% higher than in the prior year. Across its broader market coverage and specialized lending verticals, ARCC reviewed more than $1 trillion of potential investment transactions over the past 12 months.
- Constructive Direct Lending Market ConditionsManagement said market pricing, terms and lender protections in the U.S. direct lending market remained stable at generally favorable levels by historical standards. First-lien spreads on new originations widened 50 basis points from the prior quarter, leverage levels decreased by 0.5 turn, and terms and lender protections remained strong.
- Nontraditional Loan Portfolio AcquisitionARCC, alongside other Ares funds, acquired a portfolio of fully performing high-quality loans from an institutional investor at a modest discount. Management said its familiarity with many of the businesses and management teams supported underwriting and that the transaction added new borrowers and expanded ARCC's middle-market connectivity.
- Healthy Portfolio Company Operating GrowthARCC's portfolio companies generated weighted average last-twelve-month organic EBITDA growth of approximately 7%, broadly in line with the company's long-term average. ARCC's top 10 industries grew above the portfolio average, while its software portfolio also delivered organic LTM EBITDA growth in line with the broader portfolio.
- Stable and Favorable Credit MetricsAverage borrower leverage was unchanged from the prior quarter, weighted average interest coverage was 2.0x, and both metrics were consistent with their five-year averages. Loan-to-value remained approximately 47%, below ARCC's 10-year average, providing equity support beneath investments.
- Nonaccruals Remained Historically LowNonaccruals were unchanged sequentially at 2.4% of cost, below ARCC's approximately 3% historical average since the global financial crisis and the BDC historical average of approximately 4% over the same period. Nonaccruals at fair value were 1.4%, also well below ARCC's historical levels.
- Stable Risk Ratings and Stronger Lowest-Risk ExposureThe portfolio's weighted average risk rating remained stable at 3.1. Nineteen percent of the portfolio at fair value was in the lowest-risk Grade 4 category, where management expects to realize returns above cost basis; that share has increased over the past few quarters and remains above the 10-year average. Higher-risk Grades 1 and 2 represented less than one-third of the assets in Grade 4 and remained comfortably below the 10-year average.
- Stable Net Asset Value and Long-Term NAV GrowthNet asset value ended the quarter at $13.9 billion, or $19.31 per share, a decrease of $0.04 per share from the prior quarter. Management highlighted that NAV per share has grown by more than 25% since inception while ARCC has delivered stable and attractive dividends.
- Lower Leverage and Significant LiquidityNet leverage declined to 1.06x debt to equity from 1.12x in the prior quarter. Pro forma for an unsettled trade payable related to a portfolio acquisition, net leverage would have been 1.10x, with approximately $7 billion of available liquidity. The maturity profile was well laddered, with no unsecured note maturities for the remainder of 2026 and only $1.4 billion maturing in 2027.
- Improved Funding Profile and Lower Borrowing CostsARCC issued $750 million of seven-year unsecured notes due in 2033 at a spread of 185 basis points over Treasuries, described as the lowest new-issue spread and longest duration in the BDC sector during the quarter. It also reduced the weighted average spread on its $476 million inaugural debt securitization by 35 basis points while extending the reinvestment period and final maturity. Commercial paper reduced borrowing costs by approximately 70 basis points versus the corporate revolver on the $200 million to $300 million outstanding on average during the quarter.
- Additional Financing Capacity for MFICARCC obtained a $750 million upsized commitment to its existing Wells Fargo-led funding facility, expected to close upon consummation of the MFIC acquisition subject to customary closing conditions. Management said existing liquidity plus this upsize provides sufficient capacity to acquire the MFIC portfolio without requiring additional debt capital.
- Dividend Stability and Taxable Income SpilloverThe fourth-quarter 2026 regular dividend is $0.48 per share, payable December 29 to stockholders of record as of December 15. ARCC has paid stable or increasing regular quarterly dividends for 69 consecutive quarters. The company carried forward $983 million, or $1.37 per share, of taxable income spillover available for distribution to stockholders in 2026.
- Potential Benefit From Higher Base RatesGiven the predominantly floating-rate portfolio, every 100 basis point increase in base rates is expected to create approximately $0.02 per share of quarterly earnings tailwind, assuming no changes in the investment and borrowing structure. Management expects the recent base-rate increase to begin benefiting interest income in the fourth quarter after the usual contractual reset lag.
- Disciplined Underwriting and Existing-Borrower ActivityARCC originated $2.1 billion of new investment commitments during the quarter while maintaining its underwriting standards. Approximately 60% of third-quarter commitments were with existing portfolio companies, allowing ARCC to invest behind businesses and management teams it knows and, where appropriate, increase exposure to stronger-performing borrowers.
- Software Portfolio Support and Symplr RecapitalizationOnly one small software loan was on nonaccrual, and ARCC's debt investment was supported by loan-to-value ratios in the low 40% range. Management described the Symplr Software recapitalization, including preferred capital, repricing and improved documentation terms, as an example of a playbook it often uses when sponsor support and equity value remain in a company.
- MFIC Integration and Funding FlexibilityManagement expects MFIC's portfolio to fit within ARCC's existing leverage strategy, which targets 0.9x to 1.25x debt to equity and has been around 1.1x in recent quarters. Ivy Hill Asset Management is expected to review the largely performing portfolio, particularly its minority loan participations, for potential involvement. ARCC also expects to add some headcount to support the larger portfolio using its existing infrastructure.
DE:9A2 Earnings History
| Report Date | Fiscal Quarter | Forecast / EPS | Last Year's EPS | EPS YoY Change | Press Release |
|---|---|---|---|---|---|
| Feb 10, 2027 | 2026 (Q4) | 0.42- | 0.45 | ― | ― |
| Oct 27, 2026 | 2026 (Q3) | 0.420.41 | 0.45 | -8.00% (-0.04) | |
| Jul 29, 2026 | 2026 (Q2) | 0.420.42 | 0.45 | -6.00% (-0.03) | |
| Apr 28, 2026 | 2026 (Q1) | 0.430.42 | 0.45 | -6.00% (-0.03) | |
| Feb 04, 2026 | 2025 (Q4) | 0.440.45 | 0.49 | -9.09% (-0.04) | |
| Oct 28, 2025 | 2025 (Q3) | 0.450.45 | 0.52 | -13.79% (-0.07) | |
| Jul 29, 2025 | 2025 (Q2) | 0.450.45 | 0.54 | -18.03% (-0.10) | |
| Apr 29, 2025 | 2025 (Q1) | 0.470.45 | 0.53 | -15.25% (-0.08) | |
| Feb 05, 2025 | 2024 (Q4) | 0.520.49 | 0.56 | -12.70% (-0.07) | |
| Oct 30, 2024 | 2024 (Q3) | 0.530.52 | 0.53 | -1.69% (-0.01) |
The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.
Beat Missed
