Royal Bank of Canada Sells 345,189 Shares of Ares Capital Corporation $ARCC

Key Points

• Royal Bank of Canada cut its Ares Capital stake by 11.5%, selling 345,189 shares and retaining 2.67 million shares worth approximately $48.1 million.
• Ares Capital reported quarterly EPS of $0.47, matching estimates, and declared a $0.48-per-share quarterly dividend, representing a 10.2% annualized yield.
• Despite a consensus “Moderate Buy” rating and $20.40 price target, credit-quality concerns persist after five borrowers moved to non-accrual status, including an $84.6 million AmeriVet loan.

Royal Bank of Canada reduced its stake in shares of Ares Capital Corporation (NASDAQ:ARCC - Free Report) by 11.5% during the first quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The firm owned 2,669,192 shares of the investment management company's stock after selling 345,189 shares during the quarter. Royal Bank of Canada owned approximately 0.37% of Ares Capital worth $48,099,000 at the end of the most recent reporting period.

Several other institutional investors have also added to or reduced their stakes in the stock. Palladiem LLC bought a new stake in shares of Ares Capital during the 4th quarter valued at about $26,000. SWAN Capital LLC bought a new position in Ares Capital in the third quarter worth about $27,000. Sankala Group LLC bought a new position in Ares Capital in the fourth quarter worth about $28,000. Core Wealth Advisors LLC purchased a new stake in Ares Capital in the fourth quarter worth about $33,000. Finally, Quarry LP purchased a new stake in Ares Capital in the third quarter worth about $33,000. 27.38% of the stock is currently owned by institutional investors.

Ares Capital Price Performance

Shares of ARCC opened at $18.76 on Monday. Ares Capital Corporation has a fifty-two week low of $17.40 and a fifty-two week high of $22.85. The firm's 50-day simple moving average is $18.67 and its two-hundred day simple moving average is $18.89. The stock has a market cap of $13.47 billion, a PE ratio of 13.90 and a beta of 0.56. The company has a debt-to-equity ratio of 1.14, a quick ratio of 1.28 and a current ratio of 1.28.

Ares Capital (NASDAQ:ARCC - Get Free Report) last released its 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 firm had revenue of $768.00 million during the quarter, compared to analyst estimates of $770.19 million. During the same period last year, the business earned $0.50 earnings per share. Analysts anticipate that Ares Capital Corporation will post 1.9 earnings per share for the current fiscal year.

Ares Capital Announces Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, September 30th. Shareholders of record on Tuesday, September 15th will be paid a dividend of $0.48 per share. The ex-dividend date is Tuesday, September 15th. This represents a $1.92 dividend on an annualized basis and a yield of 10.2%. Ares Capital's payout ratio is presently 142.22%.

Key Headlines Impacting Ares Capital

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

• Positive Sentiment: Second-quarter earnings held up, with adjusted EPS of $0.47 matching estimates and investment income remaining resilient. Management also highlighted ARCC’s scale, improving lending terms and balance-sheet flexibility despite a slower transaction market. Ares Capital's Q2 Earnings Call Highlights Market Strength
• Positive Sentiment: ARCC declared a quarterly dividend of $0.48 per share, payable September 30 to shareholders of record September 15. The roughly 10.2% annualized yield and 17-year dividend streak support the stock’s appeal to income-focused investors. Ares Capital Just Extended Its Dividend Streak to 17 Years
• Positive Sentiment: Truist maintained a “buy” rating with a $21 price target, while Keefe, Bruyette & Woods retained an “outperform” rating with a $20 target, indicating analysts still see potential upside from current levels. Analyst Price Target Updates
• Neutral Sentiment: Broader private-credit results remained resilient, and strong fundraising across the Ares platform points to continued institutional demand. However, elevated defaults, retail redemptions and liquidity concerns remain important industry risks. Private Credit Roundup
• Negative Sentiment: Five ARCC borrowers were moved to non-accrual status during the second quarter. The largest was an $84.6 million subordinated loan to AmeriVet Veterinary Partners, raising concerns about portfolio credit quality and potential pressure on net asset value. Ares BDC Moves Five Borrowers to Non-Accrual
• Negative Sentiment: Although quarterly revenue was close to expectations, year-over-year expenses increased and unrealized losses weighed on results. Both Truist and KBW lowered their price targets, signaling a more cautious outlook even while keeping positive ratings. ARCC Stock Dips as Q2 Earnings Meet Estimates

Analyst Upgrades and Downgrades

A number of research analysts have weighed in on the company. JPMorgan Chase & Co. reduced their target price on Ares Capital from $19.00 to $18.50 and set an "overweight" rating on the stock in a report on Thursday, July 2nd. B. Riley Financial lowered their target price on Ares Capital from $22.00 to $20.00 and set a "buy" rating for the company in a research note on Wednesday, April 29th. Weiss Ratings restated a "hold (c)" rating on shares of Ares Capital in a research report on Tuesday, June 9th. Wells Fargo & Company reaffirmed an "equal weight" rating and issued a $19.00 price target (down from $20.00) on shares of Ares Capital in a research note on Friday, June 12th. Finally, Royal Bank Of Canada decreased their price objective on Ares Capital from $22.00 to $21.00 and set an "outperform" rating for the company in a report on Wednesday, April 29th. Eight investment analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the stock. According to MarketBeat.com, Ares Capital has a consensus rating of "Moderate Buy" and a consensus target price of $20.40.

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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