Is Ares Capital Corp. overvalued or undervalued?

As of 4 August 2020, Ares Capital Corp. has moved from a risky to a very attractive valuation grade, indicating a significant improvement in its investment appeal. The company is currently undervalued, with a P/E ratio of 12, which is lower than the peer average of 11.61 for Northern Trust Corp., and a notably lower EV to EBITDA ratio of 6.89 compared to the industry. Additionally, Ares Capital boasts a dividend yield of 6.95% and a robust ROCE of 16.46%, highlighting its operational efficiency.
In comparison to its peers, Ares Capital Corp. stands out with a lower P/E ratio than both Northern Trust Corp. and The Carlyle Group Inc., which has a P/E of 15.35. Furthermore, while Corebridge Financial, Inc. is deemed very expensive with a P/E of 34.60, Ares Capital's valuation appears more favorable. Despite recent stock performance lagging behind the S&P 500 over the longer term, the current valuation metrics suggest that Ares Capital Corp. presents a compelling investment opportunity at its current price of 21.47.