Last Updated: 13 Nov 2024
Executive Summary
Ares Capital Corporation (ARCC) is a business development company (BDC) that provides financing solutions to middle-market companies. The company has a market capitalization of $13.95 billion and trades on the NASDAQ exchange. ARCC has a strong track record of dividend payments, with a current yield of 0.0892%. The company's shares are currently trading at $21.53, below the analyst target price of $22.43.
Company Overview
Ares Capital Corporation was founded in 2004 and is headquartered in Los Angeles, California. The company provides a variety of financing solutions to middle-market companies, including senior secured loans, mezzanine loans, and equity investments. ARCC has a portfolio of over $20 billion in investments and has invested in over 400 companies.
Fundamental Analysis
ARCC has a strong financial profile. The company has a trailing price-to-earnings (PE) ratio of 8.3 and a forward PE ratio of 9.83. The company's book value is $19.77 per share. ARCC has a strong track record of profitability, with a net income margin of 53.7% in the past 12 months. The company's return on assets (ROA) is 5.36% and its return on equity (ROE) is 13.4%.
Technical Analysis
ARCC's stock price has been in a downtrend since early 2023. The stock price is currently trading below its 50-day and 200-day moving averages. The relative strength index (RSI) is in oversold territory, which suggests that the stock may be due for a rebound.
Short Term Outlook
In the short term, ARCC's stock price is likely to remain under pressure. The company's earnings are expected to decline in the coming quarters due to rising interest rates. However, the company's strong financial profile and attractive dividend yield should provide some support to the stock price.
Long Term Outlook
In the long term, ARCC's stock price is expected to recover. The company's strong track record of dividend payments and its focus on middle-market lending should drive long-term growth. The company's shares are currently trading at a discount to their intrinsic value, which makes them an attractive investment for long-term investors.
Analyst Recommendations
Analysts have a mixed view on ARCC's stock. Five analysts have a strong buy rating on the stock, six have a buy rating, three have a hold rating, and zero have a sell or strong sell rating. The average analyst target price is $22.43.
