Where Ares Capital Stands With Analysts

In the preceding three months, 8 analysts have released ratings for Ares Capital ARCC, presenting a wide array of perspectives from bullish to bearish.

The following table summarizes their recent ratings, shedding light on the changing sentiments within the past 30 days and comparing them to the preceding months.

Analysts provide deeper insights through their assessments of 12-month price targets, revealing an average target of $22.94, a high estimate of $24.50, and a low estimate of $21.00. Experiencing a 0.52% decline, the current average is now lower than the previous average price target of $23.06.

Breaking Down Analyst Ratings: A Detailed Examination

A comprehensive examination of how financial experts perceive Ares Capital is derived from recent analyst actions. The following is a detailed summary of key analysts, their recent evaluations, and adjustments to ratings and price targets.

| Analyst | Analyst Firm | Action Taken | Rating |Current Price Target| Prior Price Target | |--------------------|-----------------------|---------------|---------------|--------------------|--------------------| |Melissa Wedel |JP Morgan |Lowers |Overweight | $22.00|$24.50 | |Doug Harter |UBS |Lowers |Neutral | $21.00|$22.00 | |Paul Johnson |Keefe, Bruyette & Woods|Lowers |Outperform | $22.00|$23.00 | |Kenneth Lee |RBC Capital |Raises |Outperform | $24.00|$23.00 | |Paul Johnson |Keefe, Bruyette & Woods|Raises |Outperform | $23.00|$22.00 | |Finian O'Shea |Wells Fargo |Lowers |Overweight | $23.00|$24.00 | |Melissa Wedel |JP Morgan |Raises |Overweight | $24.50|$23.00 | |Timothy O'Shea |Wells Fargo |Raises |Overweight | $24.00|$23.00 |

Key Insights:

• Action Taken: Responding to changing market dynamics and company performance, analysts update their recommendations. Whether they 'Maintain', 'Raise', or 'Lower' their stance, it signifies their response to recent developments related to Ares Capital. This offers insight into analysts' perspectives on the current state of the company.
• Rating: Providing a comprehensive analysis, analysts offer qualitative assessments, ranging from 'Outperform' to 'Underperform'. These ratings reflect expectations for the relative performance of Ares Capital compared to the broader market.
• Price Targets: Analysts navigate through adjustments in price targets, providing estimates for Ares Capital's future value. Comparing current and prior targets offers insights into analysts' evolving expectations.

Understanding these analyst evaluations alongside key financial indicators can offer valuable insights into Ares Capital's market standing. Stay informed and make well-considered decisions with our Ratings Table.

Stay up to date on Ares Capital analyst ratings.

Delving into Ares Capital's Background

Ares Capital Corp is a United States-based closed-ended specialty finance company. Its investment objective is to generate both current income and capital appreciation through debt and equity investments. The company focuses on investing primarily in first lien senior secured loans (including unitranche loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, the company also invests in subordinated loans and preferred equity, it also makes common equity investments.

Ares Capital: Financial Performance Dissected

Market Capitalization Analysis: Falling below industry benchmarks, the company's market capitalization reflects a reduced size compared to peers. This positioning may be influenced by factors such as growth expectations or operational capacity.

Decline in Revenue: Over the 3M period, Ares Capital faced challenges, resulting in a decline of approximately -11.49% in revenue growth as of 31 December, 2024. This signifies a reduction in the company's top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Financials sector.

Net Margin: Ares Capital's net margin is impressive, surpassing industry averages. With a net margin of 90.84%, the company demonstrates strong profitability and effective cost management.

Return on Equity (ROE): Ares Capital's ROE falls below industry averages, indicating challenges in efficiently using equity capital. With an ROE of 2.73%, the company may face hurdles in generating optimal returns for shareholders.

Return on Assets (ROA): Ares Capital's ROA is below industry standards, pointing towards difficulties in efficiently utilizing assets. With an ROA of 1.29%, the company may encounter challenges in delivering satisfactory returns from its assets.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 1.03.

Analyst Ratings: Simplified

Within the domain of banking and financial systems, analysts specialize in reporting for specific stocks or defined sectors. Their work involves attending company conference calls and meetings, researching company financial statements, and communicating with insiders to publish "analyst ratings" for stocks. Analysts typically assess and rate each stock once per quarter.

Some analysts publish their predictions for metrics such as growth estimates, earnings, and revenue to provide additional guidance with their ratings. When using analyst ratings, it is important to keep in mind that stock and sector analysts are also human and are only offering their opinions to investors.

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This article was generated by Benzinga's automated content engine and reviewed by an editor.