Ares Capital Corp. (ARCC) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

Comparison

Company

Score

Quality

Valuation

Financial

Technical

T. Rowe Price Group, Inc.

Raymond James Financial, Inc.

Ares Management Corp.

Franklin Resources, Inc.

KKR & Co., Inc.

Corebridge Financial, Inc.

Principal Financial Group, Inc.

Northern Trust Corp.

Ares Capital Corp.

Apollo Global Management, Inc.

The Carlyle Group Inc.

Why is Ares Capital Corp. ?

Strong Long Term Fundamental Strength with an average Return on Equity (ROE) of 13.18%

Negative results in Mar 26

ROCE(HY) Lowest at 8.29%
INTEREST COVERAGE RATIO(Q) Lowest at 157.28
DEBT-EQUITY RATIO (HY) Highest at 108.02 %

With ROE of 9.07%, it has a very attractive valuation with a 0.88 Price to Book Value

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -16.18%, its profits have fallen by -15.4%

High Institutional Holdings at 38.86%

These investors have better capability and resources to analyse fundamentals of companies than most retail investors.
Their stake has increased by 4.13% over the previous quarter.

Consistent Underperformance against the benchmark over the last 3 years

Along with generating -16.18% returns in the last 1 year, the stock has also underperformed S&P 500 in each of the last 3 annual periods

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Ares Capital Corp. should be less than 10%
Overall Portfolio exposure to Capital Markets should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Capital Markets)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Ares Capital Corp. for you?

Low Risk, Low Return

Absolute

Risk Adjusted

Volatility

Ares Capital Corp.

-16.18%

-0.83

19.65%

S&P 500

25.41%

1.92

13.25%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

18.46%

EBIT Growth (5y)

21.48%

EBIT to Interest (avg)

3.97

Debt to EBITDA (avg)

Negative Net Debt

Net Debt to Equity (avg)

Sales to Capital Employed (avg)

Tax Ratio

5.26%

Dividend Payout Ratio

103.31%

Pledged Shares

Institutional Holding

38.86%

ROCE (avg)

19.34%

ROE (avg)

13.18%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

0.88

EV to EBIT

5.35

EV to EBITDA

5.35

EV to Capital Employed

0.87

EV to Sales

3.69

PEG Ratio

Dividend Yield

8.54%

ROCE (Latest)

16.19%

ROE (Latest)

9.07%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Bearish

RSI

No Signal

Bollinger Bands

Mildly Bearish

Moving Averages

Mildly Bearish (Daily)

KST

Bearish

Dow Theory

Mildly Bullish

No Trend

OBV

Mildly Bullish

No Trend

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

3What is working for the Company

DIVIDEND PAYOUT RATIO(Y)

Highest at 374.71%

RAW MATERIAL COST(Y)

Fallen by -12% (YoY

DEBTORS TURNOVER RATIO(HY)

Highest at 11.01 times

-17What is not working for the Company

ROCE(HY)

Lowest at 8.29%

INTEREST COVERAGE RATIO(Q)

Lowest at 157.28

DEBT-EQUITY RATIO (HY)

Highest at 108.02 %

PRE-TAX PROFIT(Q)

Lowest at USD 124 MM

NET PROFIT(Q)

Lowest at USD 92 MM

EPS(Q)

Lowest at USD 0.13

Here's what is working for Ares Capital Corp.

Debtors Turnover Ratio

Highest at 11.01 times

in the last five Semi-Annual periods

MOJO Watch

Company has been able to sell its Debtors faster

Debtors Turnover Ratio

Dividend Payout Ratio

Highest at 374.71%

in the last five years

MOJO Watch

Company is distributing higher proportion of profits generated as dividend

DPR (%)

Raw Material Cost

Fallen by -12% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has improved; this may lead to a rise in profit margin

Raw Material Cost as a percentage of Sales

Here's what is not working for Ares Capital Corp.

Pre-Tax Profit

At USD 124 MM has Fallen at -63.95%

over average net sales of the previous four periods of USD 344 MM

MOJO Watch

Near term Pre-Tax Profit trend is very negative

Pre-Tax Profit (USD MM)

Net Profit

At USD 92 MM has Fallen at -71.67%

over average net sales of the previous four periods of USD 324.75 MM

MOJO Watch

Near term Net Profit trend is very negative

Net Profit (USD MM)

Interest Coverage Ratio

Lowest at 157.28

in the last five periods

MOJO Watch

The company's ability to manage interest payments is deteriorating

Operating Profit to Interest

Pre-Tax Profit

Lowest at USD 124 MM

in the last five periods

MOJO Watch

Near term Pre-Tax Profit trend is negative

Pre-Tax Profit (USD MM)

Net Profit

Lowest at USD 92 MM

in the last five periods

MOJO Watch

Near term Net Profit trend is negative

Net Profit (USD MM)

EPS

Lowest at USD 0.13

in the last five periods

MOJO Watch

Declining profitability; company has created lower earnings for shareholders

EPS (USD)

Debt-Equity Ratio

Highest at 108.02 %

in the last five Semi-Annual periods

MOJO Watch

The company is borrowing more to fund its operations; it's liquidity situation may be stressed

Debt-Equity Ratio