Royal Bank Of Canada Has Lowered Expectations for Ares Capital (NASDAQ:ARCC) Stock Price

Key Points

• Royal Bank of Canada lowered its price target on Ares Capital to $21 (from $22) but kept an "outperform" rating; the consensus among analysts is a "Moderate Buy" with an average target of about $21.11, implying roughly a 12% upside.
• Q1 results showed a slight operational miss (EPS $0.47 vs. $0.48 est.; revenue $763M vs. ~$779M), yet management reaffirmed the quarterly dividend at $0.48, cited a $1.8B backlog, and reported higher net investment income aided by a noncash accounting gain.
• Company insiders (CEO and CFO) bought shares in February and the stock trades near $18.69 (1-year range $17.40–$23.42), but analysts warn that unrealized losses, spread widening and weaker transaction activity could weigh on future earnings and NAV.

Ares Capital (NASDAQ:ARCC - Get Free Report) had its price objective reduced by equities research analysts at Royal Bank Of Canada from $22.00 to $21.00 in a research note issued to investors on Wednesday,MarketScreener reports. The brokerage presently has an "outperform" rating on the investment management company's stock. Royal Bank Of Canada's price target points to a potential upside of 12.36% from the company's previous close.

A number of other equities analysts have also recently issued reports on ARCC. Wells Fargo & Company reduced their price objective on shares of Ares Capital from $21.00 to $20.00 and set an "overweight" rating on the stock in a research note on Thursday, February 5th. Wall Street Zen downgraded Ares Capital from a "hold" rating to a "sell" rating in a research note on Saturday, February 7th. B. Riley Financial restated a "buy" rating on shares of Ares Capital in a research report on Monday, February 9th. Truist Financial decreased their price objective on Ares Capital from $23.00 to $22.00 and set a "buy" rating for the company in a research note on Wednesday. Finally, JPMorgan Chase & Co. reduced their target price on Ares Capital from $22.00 to $19.00 and set an "overweight" rating on the stock in a report on Friday, March 13th. Eight analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to data from MarketBeat.com, Ares Capital currently has an average rating of "Moderate Buy" and a consensus price target of $21.11.

Ares Capital Stock Performance

Shares of NASDAQ:ARCC opened at $18.69 on Wednesday. The stock has a market capitalization of $13.42 billion, a P/E ratio of 10.05 and a beta of 0.58. Ares Capital has a 1-year low of $17.40 and a 1-year high of $23.42. The company has a current ratio of 1.70, a quick ratio of 1.70 and a debt-to-equity ratio of 1.12. The business has a 50-day moving average price of $18.52 and a two-hundred day moving average price of $19.61.

Ares Capital (NASDAQ:ARCC - Get Free Report) last issued its earnings results on Tuesday, April 28th. The investment management company reported $0.47 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.01). Ares Capital had a net margin of 42.56% and a return on equity of 9.89%. The business had revenue of $763.00 million during the quarter, compared to the consensus estimate of $779.10 million. During the same period last year, the business posted $0.50 EPS. The firm's revenue for the quarter was up 4.2% compared to the same quarter last year. Equities analysts predict that Ares Capital will post 1.93 earnings per share for the current year.

Insider Activity at Ares Capital

In related news, CFO Scott C. Lem acquired 5,186 shares of the business's stock in a transaction that occurred on Friday, February 6th. The shares were acquired at an average cost of $19.29 per share, with a total value of $100,037.94. Following the transaction, the chief financial officer owned 39,463 shares of the company's stock, valued at $761,241.27. The trade was a 15.13% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, CEO Michael Kort Schnabel bought 12,500 shares of Ares Capital stock in a transaction that occurred on Thursday, February 5th. The stock was bought at an average cost of $19.13 per share, with a total value of $239,125.00. Following the completion of the purchase, the chief executive officer owned 40,500 shares in the company, valued at approximately $774,765. This trade represents a 44.64% increase in their position. The disclosure for this purchase is available in the SEC filing. 0.49% of the stock is owned by corporate insiders.

Institutional Trading of Ares Capital

A number of institutional investors have recently modified their holdings of the company. City Holding Co. lifted its position in shares of Ares Capital by 444.4% in the third quarter. City Holding Co. now owns 1,225 shares of the investment management company's stock worth $25,000 after purchasing an additional 1,000 shares in the last quarter. Palladiem LLC acquired a new stake in Ares Capital in the 4th quarter valued at about $26,000. SWAN Capital LLC acquired a new stake in shares of Ares Capital in the third quarter valued at approximately $27,000. Sankala Group LLC bought a new position in Ares Capital during the fourth quarter worth $28,000. Finally, NBT Bank N A NY bought a new stake in shares of Ares Capital during the 3rd quarter worth about $31,000. 27.38% of the stock is currently owned by institutional investors.

Trending Headlines about Ares Capital

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

• Positive Sentiment: Board reaffirmed the dividend at $0.48 quarterly (≈10% yield) — supports income-focused investors and reduces near-term distribution risk. Business Wire: Press Release
• Positive Sentiment: Management flagged a $1.8B backlog and said the year is off to a strong start — pipeline/backlog gives revenue visibility and supports future investment income. MSN: Backlog & Dividend Coverage
• Positive Sentiment: Net investment income rose after a noncash accounting gain (NII $398M / $0.55), which helped headline profitability despite markdowns — shows earnings can be supported by realized/unrealized accounting items. Yahoo Finance: Profit After Accounting Gain
• Neutral Sentiment: Q1 results showed a small operational miss (EPS $0.47 vs. $0.48 est.; revenue $763M vs. ~$779M est.) — modest shortfall but not a large shock. MarketBeat: Q1 Results Summary
• Neutral Sentiment: Software exposure (~22% of loans) was modestly trimmed and valuations were described as steady — mitigates a headline risk around SaaS defaults but keeps sector concentration visible. Reuters: Software Valuations Steady
• Negative Sentiment: Core earnings slipped slightly below the dividend and GAAP income fell sharply on markdowns — indicates mark-to-market volatility that can pressure distributable earnings if trends persist. Benzinga: Dividend Pressure Analysis
• Negative Sentiment: Analysts and articles flagged unrealized losses, spread widening and lower transaction activity — ongoing spread volatility could weigh on future earnings and NAV if credit conditions worsen. Investing.com: Unrealized Losses & Spread Widening

Ares Capital Company Profile

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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