Ares Capital (9A2) AI Stock Analysis

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Ares Capital

(Frankfurt:9A2)

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Positive Factors

Strong cash generationTTM operating and free cash flow of about $1.82 billion, with free cash flow roughly matching net income and rebounding 71%, indicates strong conversion of reported earnings into cash. That supports recurring distributions, portfolio reinvestment and resilience through normal credit cycles.

Negative Factors

Meaningful leverageLeverage around 1.0x to 1.3x debt-to-equity amplifies both portfolio returns and the impact of credit deterioration. Although described as workable, this debt burden reduces balance-sheet flexibility, raises funding sensitivity and can constrain investment capacity during stress.

Ares Capital (9A2) vs. iShares MSCI Germany ETF (EWG)

Market Cap: EUR 14.05B
Dividend Yield: 9.66%
Average Volume (3M): 602
Price to Earnings (P/E): 15.9
Beta (1Y): 0.38
Revenue Growth: -12.22%
EPS Growth: -41.47%
Country: Germany
Employees: 4,250
Sector: Financial
Sector Strength: 68
Industry: Asset Management

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 fundin...

Ares Capital Earnings Call Summary

Earnings Call Date:Oct 26, 2026(Q3-2026)|% Change Since:3.86%|Next Earnings Date:Feb 09, 2027

Earnings Call SentimentPositive

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.

Positive Updates

Solid Quarterly Earnings and Return on Equity

Third-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.

Negative Updates

Slower Third-Quarter Origination Environment

Macroeconomic shifts, geopolitical developments, volatility around interest rates, inflation and global trade reduced visibility and elongated M&A processes. Combined with ARCC's continued selectivity, these factors resulted in a more modest pace of new investment activity during the third quarter.

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.

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

1 New Risk

1.The Russian invasion of Ukraine may have a material adverse impact on us and our portfolio companies.Q2, 2022

Ares Capital Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

DE:9A2 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MAIN	79Outperform	$5.27B	11.62	14.81%	7.51%	3.49%	-18.26%
OBDC	73Outperform	$5.18B	15.82	3.95%	12.83%	1.32%	-62.13%
Sector *	68Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
BXSL	65Neutral	$5.41B	18.82	4.86%	12.88%	-14.94%	-55.20%
TSLX	62Neutral	$1.71B	21.20	5.05%	10.11%	-20.71%	-59.36%
FSK	61Neutral	$3.08B	-8.49	-6.65%	17.80%	-35.39%	-272.02%

* Financial Sector Average

Performance Comparison

DE:9A2 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
DE:9A2	Ares Capital	17.24	1.60	10.26%
MAIN	Main Street Capital	56.82	2.24	4.10%
TSLX	Sixth Street Specialty Lending, Inc.	17.77	-1.46	-7.58%
FSK	Fs Kkr Capital	11.66	-1.19	-9.23%
OBDC	Blue Owl Capital Corporation	10.81	0.08	0.71%
BXSL	Blackstone Secured Lending Fund	24.17	0.80	3.41%

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.

Ares Capital AI Stock Analysis