Is Ares Capital Corp. overvalued or undervalued?

As of 4 August 2020, Ares Capital Corp. moved from risky to very attractive, indicating a significant improvement in its valuation outlook. The company appears undervalued based on its current metrics, with a P/E ratio of 12, a Price to Book Value of 1.13, and an EV to EBITDA ratio of 6.89. In comparison, Ares Management Corp. has a much higher P/E of 111.58, while T. Rowe Price Group, Inc. shows a P/E of 12.03, highlighting Ares Capital's relative attractiveness in the capital markets sector.
Despite recent underperformance against the S&P 500, with a 1-year return of 5.31% compared to 17.14% for the index, the company's strong dividend yield of 6.95% and ROCE of 16.46% further support its valuation narrative. Overall, Ares Capital Corp. presents a compelling investment opportunity given its attractive valuation metrics relative to peers.