Ares Capital Corporation (NASDAQ:ARCC) Stock Has Average Price Target of $20.60

Key Points

• Analysts have a moderately bullish view: Eight of 11 analysts rate Ares Capital a “buy,” while three recommend holding the stock. The average 12-month price target is $20.60, above the reported share price of $18.64.
• Institutional ownership increased: Several major investors, including Van ECK Associates, Bank of America and HighTower Advisors, added to their positions. Hedge funds and other institutions own 27.38% of Ares Capital.
• Ares Capital offers a high dividend yield but elevated payout ratio: Its quarterly dividend is $0.48 per share, or $1.92 annually, representing a 10.3% yield and a 142.22% payout ratio. Recent quarterly EPS of $0.47 matched analyst expectations, while revenue slightly missed estimates.

Shares of Ares Capital Corporation (NASDAQ:ARCC - Get Free Report) have been given an average recommendation of "Moderate Buy" by the eleven analysts that are currently covering the firm, MarketBeat Ratings reports. Three research analysts have rated the stock with a hold recommendation and eight have given a buy recommendation to the company. The average 1 year price target among analysts that have covered the stock in the last year is $20.60.

A number of research analysts have recently issued reports on ARCC shares. Wells Fargo & Company reiterated an "equal weight" rating and set a $19.00 price objective (down from $20.00) on shares of Ares Capital in a report on Friday, June 12th. JPMorgan Chase & Co. lowered their target price on shares of Ares Capital from $19.00 to $18.50 and set an "overweight" rating on the stock in a report on Thursday, July 2nd. Keefe, Bruyette & Woods dropped their price target on shares of Ares Capital from $21.00 to $20.00 and set an "outperform" rating on the stock in a research report on Thursday, July 30th. Weiss Ratings reiterated a "hold (c)" rating on shares of Ares Capital in a research note on Friday, September 4th. Finally, Wall Street Zen raised Ares Capital from a "sell" rating to a "hold" rating in a report on Saturday, September 19th.

Institutional Investors Weigh In On Ares Capital

Institutional investors and hedge funds have recently bought and sold shares of the stock. Van ECK Associates Corp boosted its holdings in Ares Capital by 22.2% during the 2nd quarter. Van ECK Associates Corp now owns 13,306,095 shares of the investment management company's stock worth $246,562,000 after acquiring an additional 2,418,984 shares during the last quarter. Strs Ohio purchased a new stake in shares of Ares Capital in the first quarter valued at about $189,210,000. Bank of America Corp DE raised its holdings in shares of Ares Capital by 16.0% in the first quarter. Bank of America Corp DE now owns 9,135,454 shares of the investment management company's stock valued at $164,621,000 after purchasing an additional 1,259,230 shares during the last quarter. Legal & General Group Plc bought a new position in shares of Ares Capital during the second quarter valued at about $120,538,000. Finally, HighTower Advisors LLC lifted its position in shares of Ares Capital by 9.5% during the second quarter. HighTower Advisors LLC now owns 3,870,130 shares of the investment management company's stock valued at $71,714,000 after purchasing an additional 335,197 shares in the last quarter. 27.38% of the stock is owned by hedge funds and other institutional investors.

Ares Capital Price Performance

Shares of NASDAQ:ARCC opened at $18.64 on Wednesday. Ares Capital has a twelve month low of $17.40 and a twelve month high of $21.14. The stock's 50 day moving average is $19.57 and its 200-day moving average is $18.94. The company has a quick ratio of 1.28, a current ratio of 1.28 and a debt-to-equity ratio of 1.14. The firm has a market capitalization of $13.38 billion, a price-to-earnings ratio of 13.81 and a beta of 0.61.

Ares Capital (NASDAQ:ARCC - Get Free Report) last posted its quarterly earnings results on Wednesday, July 29th. The investment management company reported $0.47 earnings per share (EPS) for the quarter, meeting the consensus estimate of $0.47. Ares Capital had a net margin of 30.91% and a return on equity of 9.80%. The business had revenue of $768.00 million during the quarter, compared to the consensus estimate of $770.19 million. During the same quarter last year, the firm posted $0.50 EPS. Sell-side analysts forecast that Ares Capital will post 1.91 EPS for the current fiscal year.

Ares Capital Dividend Announcement

The business also recently announced a quarterly dividend, which was paid on Wednesday, September 30th. Investors of record on Tuesday, September 15th were given a dividend of $0.48 per share. The ex-dividend date of this dividend was Tuesday, September 15th. This represents a $1.92 annualized dividend and a dividend yield of 10.3%. Ares Capital's payout ratio is presently 142.22%.

Ares Capital Company Profile

Ares Capital Corporation NASDAQ: ARCC is a specialty finance company that operates as a business development company (BDC). It provides financing to middle-market companies, primarily through directly originated loans and other investments. Ares Capital seeks to support businesses that may require capital for acquisitions, growth initiatives, recapitalizations, refinancings and other corporate purposes.

The company invests across a range of industries and typically provides first-lien senior secured loans, second-lien loans, subordinated debt and, to a lesser extent, equity investments.

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