Ares Capital (NASDAQ:ARCC) Stock Rating Lowered by Wall Street Zen

Key Points

• Wall Street Zen downgraded Ares Capital from “Hold” to “Sell,” contrasting with UBS’s “Buy” upgrade and other positive ratings. Overall, analysts maintain a “Moderate Buy” consensus with an average price target of $20.39.
• Ares Capital reported quarterly EPS of $0.46, missing the $0.48 consensus estimate, while revenue fell 2.4% year over year to $763 million. The earnings shortfall came amid concerns about dividend coverage and declining net asset value.
• ARCC shares opened at $19.11, near their 50-day and 200-day moving averages, with a market capitalization of approximately $13.8 billion. Institutional investors own 27.38% of the company.

Ares Capital (NASDAQ:ARCC - Get Free Report) was downgraded by equities researchers at Wall Street Zen from a "hold" rating to a "sell" rating in a research note issued on Saturday, Wall Street Zen reports.

Other equities analysts also recently issued research reports about the company. UBS Group upgraded Ares Capital from a "neutral" rating to a "buy" rating and set a $21.00 price target on the stock in a research report on Thursday. Truist Financial cut their price objective on Ares Capital from $22.00 to $21.00 and set a "buy" rating for the company in a research report on Thursday, July 30th. Citigroup reaffirmed a "market outperform" rating on shares of Ares Capital in a research note on Wednesday. Weiss Ratings reaffirmed a "hold (c)" rating on shares of Ares Capital in a research note on Friday, September 4th. Finally, Keefe, Bruyette & Woods decreased their target price on Ares Capital from $21.00 to $20.00 and set an "outperform" rating on the stock in a research report on Thursday, July 30th. Nine investment analysts have rated the stock with a Buy rating and two have given a Hold rating to the company's stock. According to data from MarketBeat.com, the stock has a consensus rating of "Moderate Buy" and a consensus price target of $20.39.

Ares Capital Stock Down 0.1%

ARCC opened at $19.11 on Friday. The company has a fifty day moving average of $19.22 and a two-hundred day moving average of $19.03. The stock has a market capitalization of $13.80 billion, a price-to-earnings ratio of 15.66 and a beta of 0.61. Ares Capital has a fifty-two week low of $17.40 and a fifty-two week high of $21.14. The company has a debt-to-equity ratio of 1.08, a quick ratio of 1.28 and a current ratio of 1.00.

Ares Capital (NASDAQ:ARCC - Get Free Report) last posted its earnings results on Tuesday, October 27th. The investment management company reported $0.46 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.02). Ares Capital had a return on equity of 9.72% and a net margin of 28.34%. The firm had revenue of $763.00 million for the quarter, compared to analysts' expectations of $776.34 million. During the same period in the previous year, the company earned $0.50 earnings per share. The company's revenue was down 2.4% compared to the same quarter last year. On average, research analysts expect that Ares Capital will post 1.88 earnings per share for the current year.

Institutional Trading of Ares Capital

Several large investors have recently bought and sold shares of the business. Fortitude Family Office LLC raised its holdings in shares of Ares Capital by 145.2% in the 3rd quarter. Fortitude Family Office LLC now owns 1,297 shares of the investment management company's stock valued at $25,000 after buying an additional 768 shares during the period. Orion Capital Management LLC purchased a new position in Ares Capital during the 2nd quarter valued at about $25,000. Continuum Advisory LLC purchased a new position in Ares Capital during the 2nd quarter valued at about $30,000. TOP Private Wealth LLC. purchased a new position in Ares Capital during the 2nd quarter valued at about $31,000. Finally, MADDEN SECURITIES Corp acquired a new position in Ares Capital in the 3rd quarter valued at about $46,000. Hedge funds and other institutional investors own 27.38% of the company's stock.

Ares Capital News Roundup

Here are the key news stories impacting Ares Capital this week:

• Positive Sentiment: UBS upgraded ARCC to “Buy” and set a $21 price target, implying roughly 10% upside from the referenced share price. The upgrade supports the bullish case that ARCC’s valuation and income profile remain attractive. UBS upgrade coverage
• Positive Sentiment: B. Riley Securities reiterated its Buy rating, indicating continued confidence in ARCC’s ability to generate shareholder returns despite recent earnings softness. B. Riley Buy rating
• Positive Sentiment: ARCC’s planned acquisition of MidCap Financial Investment Corporation NASDAQ: MFIC could expand its investment platform and portfolio scale. MFIC canceled its upcoming earnings call because of the pending transaction, confirming the deal is progressing. MidCap acquisition announcement
• Neutral Sentiment: Articles discussing the tax treatment of high-yield BDC dividends may increase investor awareness of ARCC’s ordinary-income taxation, but they do not represent a change in the company’s fundamentals or dividend policy. Dividend tax article
• Negative Sentiment: Third-quarter core EPS and net investment income declined to $0.46, below the $0.48 quarterly dividend and analysts’ $0.48 earnings estimate. Revenue also fell year over year, raising concerns about sustainable dividend coverage. Ares Capital third-quarter results
• Negative Sentiment: Analysts also pointed to a fourth consecutive quarterly decline in NAV and increased non-accrual investments. These credit-quality trends, combined with the earnings shortfall, led to a more cautious “Hold” view from some coverage despite ARCC trading below book value. Ares Capital Hold analysis

About Ares Capital

Ares Capital Corporation NASDAQ: ARCC is a business development company that provides financing to middle-market companies. The company primarily invests in first-lien senior secured loans, second-lien loans, subordinated debt, and, to a lesser extent, equity securities. Its investments are generally designed to support acquisitions, recapitalizations, refinancings, growth initiatives, and other corporate activities.

Founded in 2004, Ares Capital is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.

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