Ares Capital Corporation (ARCC) – Research Analysts’ Weekly Ratings Updates
A number of research firms have changed their ratings and price targets for Ares Capital Corporation (NASDAQ: ARCC):
- 10/3/2017 – Ares Capital Corporation was downgraded by analysts at Zacks Investment Research from a “hold” rating to a “sell” rating. According to Zacks, “ARES CAPITAL CORPORATION is a specialty finance company that is a closed-end, non-diversified management investment company. Ares Capital Corporation has elected to be regulated as a business development company under the Investment Company Act of 1940. Its investment objective is to generate both current income and capital appreciation through debt and equity investments. Ares Capital Corporation invests primarily in first and second lien senior loans and mezzanine debt, which in some cases includes an equity component, and, to a lesser extent, in equity investments in private U.S. middle market companies. “
- 9/21/2017 – Ares Capital Corporation is now covered by analysts at Oppenheimer Holdings, Inc.. They set an “outperform” rating and a $18.00 price target on the stock.
- 9/21/2017 – Ares Capital Corporation is now covered by analysts at CIBC. They set an “outperform” rating and a $18.00 price target on the stock.
- 9/20/2017 – Ares Capital Corporation is now covered by analysts at Citigroup Inc.. They set an “outperform” rating and a $18.00 price target on the stock.
- 8/25/2017 – Ares Capital Corporation had its “hold” rating reaffirmed by analysts at BMO Capital Markets. They now have a $15.00 price target on the stock.
- 8/8/2017 – Ares Capital Corporation was downgraded by analysts at BidaskClub from a “sell” rating to a “strong sell” rating.
- 8/7/2017 – Ares Capital Corporation was upgraded by analysts at TheStreet from a “c+” rating to a “b” rating.
- 8/7/2017 – Ares Capital Corporation had its “buy” rating reaffirmed by analysts at National Securities. They now have a $19.00 price target on the stock. They wrote, “• Ares reported core NII of $0.34/share versus our estimate of $0.38/share, as ACAS assets with no yield or lower yields weighed on overall effective yield, NIM, and thus earnings. However, we note that this is a $0.02/share improvement Q/Q as the company makes progress in recycling assets and that prepayment fees, which many BDCs account for in investment income, are accounted for as realized gains at ARCC and were $0.02/share. We expect Ares to achieve full dividend coverage on a core NII basis in 4Q17.
• In 3Q17 ARCC purchased the remaining $1.6 billion of loans from the SSLP (Senior Secured Loan Program) with GE Capital and the joint venture (JV) was ended. As a result, ARCC’s 30% basket is freed up significantly. As of 6/30/17, the SSLP was 16.5% of the portfolio at amortized cost and the SDLP (Senior Direct Lending Program) was a mere 3.4%. This provides Ares with much needed breathing room in the 30% basket and should permit the company to comfortably ramp its SDLP JV with Varagon. While it will take time to ramp the program, we think ARCC sees ample deal flow in the upper middle market (UMM) already which is what goes into the JV, making deal sourcing easier for the program. Additionally, Ares could potentially put some or all of the $1.6 billion in loans purchased from the SSLP into the SDLP although this would of course require the consent of Varagon.
• We are revising our 2017 core NII/share estimate to $1.46 from $1.59 and our 2018 core NII/share estimate to $1.65 from $1.72.
Shares of Ares Capital Corporation (ARCC) traded up 0.12% on Tuesday, hitting $16.43. The stock had a trading volume of 889,690 shares. The firm has a 50 day moving average price of $16.02 and a 200 day moving average price of $16.58. Ares Capital Corporation has a one year low of $15.01 and a one year high of $17.87.
Ares Capital Corporation (NASDAQ:ARCC) last announced its quarterly earnings results on Wednesday, August 2nd. The investment management company reported $0.34 earnings per share for the quarter, missing analysts’ consensus estimates of $0.36 by ($0.02). Ares Capital Corporation had a return on equity of 8.95% and a net margin of 44.61%. The firm had revenue of $284.00 million for the quarter, compared to the consensus estimate of $297.77 million. During the same period in the prior year, the business earned $0.50 earnings per share. Analysts forecast that Ares Capital Corporation will post $1.40 EPS for the current fiscal year.
The company also recently disclosed a quarterly dividend, which was paid on Friday, September 29th. Investors of record on Friday, September 15th were given a $0.38 dividend. This represents a $1.52 dividend on an annualized basis and a dividend yield of 9.25%. The ex-dividend date of this dividend was Thursday, September 14th. Ares Capital Corporation’s dividend payout ratio is currently 117.83%.
Ares Capital Corporation is a specialty finance company. The Company operates as a closed-end, non-diversified management investment company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. It invests primarily in the United States middle-market companies.
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