Ares Capital (NASDAQ:ARCC) Stock Breaks Above Two Hundred Day Moving Average - Here's What Happened

Key Points

• Ares Capital shares rose above their 200-day moving average, reaching $19.14 and last trading near $19.12 on volume of about 5.8 million shares.
• The company agreed to acquire MidCap Financial Investment for approximately $2.6 billion, a deal expected to increase scale and potentially boost earnings. ARCC also declared a quarterly dividend of $0.48 per share, implying an annualized yield of roughly 10%.
• Third-quarter results fell short of expectations, with EPS of $0.46 versus $0.48 expected and revenue down 2.4% year over year. Higher non-accrual investments and dividend coverage concerns remain key risks, despite analysts’ overall “Moderate Buy” consensus and $20.39 target price.

Ares Capital Corporation (NASDAQ:ARCC - Get Free Report)'s share price passed above its two hundred day moving average during trading on Thursday. The stock has a two hundred day moving average of $19.04 and traded as high as $19.14. Ares Capital shares last traded at $19.12, with a volume of 5,821,915 shares changing hands.

Trending Headlines about Ares Capital

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

• Positive Sentiment: ARCC agreed to acquire MidCap Financial Investment in a transaction valued at approximately $2.6 billion. Management expects the deal to expand scale, provide potential earnings accretion and strengthen the company’s lending platform. ARCC Misses on Q3 Earnings as Income Falls, Announces MidCap Buyout
• Positive Sentiment: Management highlighted improving lending conditions, a strong pipeline and a 25% year-over-year increase in year-to-date transaction volume under review, supporting the possibility of future portfolio and earnings growth. Ares Capital Q3 Earnings Call Highlights MidCap Deal and Lending Outlook
• Positive Sentiment: ARCC declared a quarterly dividend of $0.48 per share, or $1.92 annualized, representing an indicated yield of roughly 10.4%. The declaration reinforces its appeal to income-focused investors. Ares Capital Announces Q3 2026 Earnings and $0.48 Dividend for Q4
• Neutral Sentiment: ARCC’s relatively healthy loan portfolio and acquisition prospects contrast with increased non-accrual investments, leaving investors focused on whether credit quality remains resilient as the company grows.
• Negative Sentiment: Third-quarter EPS was $0.46, below the $0.48 consensus estimate, while revenue of $763 million also missed expectations and declined year over year. Core earnings fell slightly short of the quarterly dividend, raising questions about the sustainability of the payout. Is Ares Capital Corp a Buy After Its Latest Earnings Report?
• Negative Sentiment: Analysts and commentators are divided: some view the MidCap transaction and 10% yield favorably, while others warn that weaker income, higher non-accruals and dividend coverage risks warrant caution. Dividend taxation may also reduce after-tax returns for investors holding ARCC outside tax-advantaged accounts.

Wall Street Analysts Forecast Growth

A number of research analysts have recently weighed in on ARCC shares. Wall Street Zen raised shares of Ares Capital from a "sell" rating to a "hold" rating in a research note on Saturday, September 19th. JPMorgan Chase & Co. cut their price objective on Ares Capital from $19.00 to $18.50 and set an "overweight" rating for the company in a research report on Thursday, July 2nd. Weiss Ratings reaffirmed a "hold (c)" rating on shares of Ares Capital in a research note on Friday, September 4th. UBS Group upgraded Ares Capital from a "neutral" rating to a "buy" rating and set a $21.00 target price on the stock in a report on Thursday. Finally, Citigroup reissued a "market outperform" rating on shares of Ares Capital in a research report on Wednesday. Nine analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. According to data from MarketBeat.com, the company has an average rating of "Moderate Buy" and a consensus target price of $20.39.

Ares Capital Price Performance

The company has a debt-to-equity ratio of 1.08, a current ratio of 1.00 and a quick ratio of 1.28. The company has a fifty day moving average price of $19.24 and a 200 day moving average price of $19.04. The company has a market capitalization of $13.81 billion, a P/E ratio of 15.67 and a beta of 0.61.

Ares Capital (NASDAQ:ARCC - Get Free Report) last posted its earnings results on Tuesday, October 27th. The investment management company reported $0.46 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 during the quarter, compared to the consensus estimate of $776.34 million. During the same quarter last year, the company posted $0.50 EPS. Ares Capital's revenue for the quarter was down 2.4% on a year-over-year basis. On average, sell-side analysts forecast that Ares Capital Corporation will post 1.89 EPS for the current fiscal year.

Ares Capital Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Tuesday, December 29th. Stockholders of record on Tuesday, December 15th will be given a dividend of $0.48 per share. The ex-dividend date is Tuesday, December 15th. This represents a $1.92 annualized dividend and a dividend yield of 10.0%. Ares Capital's dividend payout ratio (DPR) is 142.22%.

Institutional Trading of Ares Capital

A number of large investors have recently added to or reduced their stakes in ARCC. Foresight Capital Management Advisors Inc. lifted its position in shares of Ares Capital by 17.2% in the 2nd quarter. Foresight Capital Management Advisors Inc. now owns 345,778 shares of the investment management company's stock worth $6,407,000 after acquiring an additional 50,624 shares during the period. Focus Partners Advisor Solutions LLC bought a new stake in shares of Ares Capital during the second quarter valued at approximately $747,000. Concurrent Investment Advisors LLC increased its position in shares of Ares Capital by 132.4% during the second quarter. Concurrent Investment Advisors LLC now owns 155,429 shares of the investment management company's stock valued at $2,880,000 after purchasing an additional 88,558 shares during the period. Bank of New York Mellon Corp raised its stake in shares of Ares Capital by 53.5% in the first quarter. Bank of New York Mellon Corp now owns 240,483 shares of the investment management company's stock valued at $4,333,000 after purchasing an additional 83,841 shares in the last quarter. Finally, HighTower Advisors LLC raised its stake in shares of Ares Capital by 9.5% in 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 currently owned by institutional investors.

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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