Ares Capital (NASDAQ:ARCC) Hits New 12-Month Low - Here's Why

Key Points

• Ares Capital hit a new 52-week low intraday at $18.13 and was trading around $18.23 on heavy volume (~6.7M shares), with its 50-day ($19.79) and 200-day ($20.32) moving averages still above the current price.
• The firm declared a quarterly dividend of $0.48 (annualized $1.92), implying a 10.5% yield
• Analysts have a consensus Moderate Buy on ARCC with an average target of $22 amid mixed rating changes and price cuts, and insiders — including the CEO and CFO — recently purchased shares, modestly increasing their ownership.

Ares Capital Corporation (NASDAQ:ARCC - Get Free Report)'s share price reached a new 52-week low during mid-day trading on Thursday . The company traded as low as $18.13 and last traded at $18.2250, with a volume of 6675197 shares changing hands. The stock had previously closed at $18.49.

Wall Street Analysts Forecast Growth

ARCC has been the subject of a number of research analyst reports. Weiss Ratings restated a "hold (c+)" rating on shares of Ares Capital in a report on Monday, December 29th. B. Riley Financial reiterated a "buy" rating on shares of Ares Capital in a report on Monday, February 9th. Wall Street Zen lowered Ares Capital from a "hold" rating to a "sell" rating in a research note on Saturday, February 7th. Royal Bank Of Canada cut their price objective on Ares Capital from $23.00 to $22.00 and set an "outperform" rating on the stock in a report on Monday, February 9th. Finally, Wells Fargo & Company reduced their price objective on Ares Capital from $21.00 to $20.00 and set an "overweight" rating on the stock in a research note on Thursday, February 5th. Seven investment analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the company. According to data from MarketBeat.com, Ares Capital presently has a consensus rating of "Moderate Buy" and an average target price of $22.00.

Ares Capital Price Performance

The company has a market cap of $13.15 billion, a price-to-earnings ratio of 9.85 and a beta of 0.59. The company's 50-day simple moving average is $19.79 and its 200-day simple moving average is $20.32. The company has a debt-to-equity ratio of 1.12, a current ratio of 1.70 and a quick ratio of 1.70.

Ares Capital (NASDAQ:ARCC - Get Free Report) last announced its earnings results on Wednesday, February 4th. The investment management company reported $0.50 earnings per share for the quarter, meeting the consensus estimate of $0.50. The business had revenue of $793.00 million during the quarter, compared to the consensus estimate of $795.20 million. Ares Capital had a net margin of 42.56% and a return on equity of 9.89%. The business's quarterly revenue was up 4.5% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.55 earnings per share. On average, equities research analysts anticipate that Ares Capital Corporation will post 2.19 EPS for the current year.

Ares Capital Dividend Announcement

The firm also recently disclosed a quarterly dividend, which will be paid on Tuesday, March 31st. Shareholders of record on Friday, March 13th will be paid a dividend of $0.48 per share. This represents a $1.92 dividend on an annualized basis and a yield of 10.5%. The ex-dividend date is Friday, March 13th. Ares Capital's dividend payout ratio (DPR) is 103.23%.

Insider Buying and Selling

In other news, CEO Michael Kort Schnabel acquired 12,500 shares of the stock in a transaction that occurred on Thursday, February 5th. The stock was purchased at an average cost of $19.13 per share, with a total value of $239,125.00. Following the completion of the acquisition, the chief executive officer directly owned 40,500 shares in the company, valued at $774,765. This represents a 44.64% increase in their ownership of the stock. The acquisition was disclosed in a legal filing with the SEC, which can be accessed through the SEC website. Also, CFO Scott C. Lem acquired 5,186 shares of the business's stock in a transaction on Friday, February 6th. The shares were purchased at an average price of $19.29 per share, for a total transaction of $100,037.94. Following the purchase, the chief financial officer directly owned 39,463 shares of the company's stock, valued at $761,241.27. This represents a 15.13% increase in their ownership of the stock. The SEC filing for this purchase provides additional information. 0.48% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Ares Capital

A number of institutional investors have recently made changes to their positions in ARCC. Morgan Stanley increased its stake in Ares Capital by 2.0% during the fourth quarter. Morgan Stanley now owns 17,558,581 shares of the investment management company's stock valued at $355,210,000 after purchasing an additional 341,578 shares during the last quarter. UBS Group AG lifted its holdings in shares of Ares Capital by 41.8% in the 4th quarter. UBS Group AG now owns 11,201,905 shares of the investment management company's stock worth $226,615,000 after purchasing an additional 3,301,890 shares during the last quarter. Bank of America Corp DE boosted its position in Ares Capital by 8.9% during the 2nd quarter. Bank of America Corp DE now owns 8,678,129 shares of the investment management company's stock valued at $190,572,000 after purchasing an additional 705,882 shares during the period. JPMorgan Chase & Co. grew its stake in Ares Capital by 18.6% during the 2nd quarter. JPMorgan Chase & Co. now owns 6,404,876 shares of the investment management company's stock worth $140,651,000 after buying an additional 1,006,460 shares during the last quarter. Finally, Legal & General Group Plc increased its position in Ares Capital by 16.4% in the fourth quarter. Legal & General Group Plc now owns 5,408,067 shares of the investment management company's stock worth $109,432,000 after buying an additional 761,838 shares during the period. 27.38% of the stock is currently owned by institutional investors.

About Ares Capital

Ares Capital Corporation NASDAQ: ARCC is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm's flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.

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