Assessing Whether Ares Capital Corporation (NASDAQ: ARCC) Is Over- Or Undervalued



    Ares Capital Corporation (ARCC) concluded trading on 08/12/20 at a closing price of $15.00, with 2.23 million shares of worth about $33.41 million changed hands on the day. Weekly performance of the stock remained positive as price took a surge of 1.49% during that period and on Wednesday the price saw a gain of about 0.60%. Currently the company’s common shares owned by public are about 422.62M shares.

    A deeper look into what the analysts at Wall Street are thinking about the price target of this stock provides us with the following: 16 analysts are covering the ARCC stock and their offered price forecasts bring an average price target of $15.83. Over the next 12 months, analysts forecasted that the stock’s price could jump as high as $17.00 and could fall to a lowest price of $14.00. Analysts also issued an outlook of 1.70 for the Ares Capital Corporation stock for next 12 months. The stock’s current price level is 5.24% above of average price target set by the analysts, while a rise to estimated low would result in loss of -7.14 for the stock. However, touching the estimated high of $17.00 would mean a gain of 11.76% for the stock.

    According to filings with the U.S. Securities and Exchange Commission (SEC), insiders took part in trade of the company’s stock for 10 times over the past 12 months. They bought 33,819 shares in 10 of the transactions. In 0 selling transactions, insiders dumped 0 shares.

    VanEck Vectors – BDC Income ETF, Dynamic Alternative Yield Fund, and Lord Abbett Value Opportunities F are the top 3 mutual funds which are holding stakes in Ares Capital Corporation VanEck Vectors – BDC Income ETF is currently holding 2.24 million shares of worth totaling $32.43 million. The company recently came buying 6607.0 shares which brought its stake up to 0.53% of the company’s outstanding shares. Dynamic Alternative Yield Fund sold -0.35 million shares, after which its hold over company’s outstanding shares shrunk to 0.43%, leaving 1.81 million shares with the mutual fund that have a worth of about $26.16 million. Lord Abbett Value Opportunities F, after selling 1.4 million shares, have now control over 0.33% of the stake in the company. It holds 46900.0 shares of worth $20.24 million.

    Ares Capital Corporation (NASDAQ: ARCC) started trading at $15.07, anove $0.16 from concluding price of the previous day. However, the stock finished the trading on the day at a closing price of $15.00, or with a gain of 0.60%. Stock saw a price change of 1.49% in past 5 days and over the past one month there was a price change of 5.86%. Year-to-date (YTD), ARCC shares are showing a performance of -19.57% which decreased to -18.92% when we look at its performance for past 12 months. Over the period of past 52 weeks, stock dropped to lowest price of $7.90 but also hit the highest price of $19.33 during that period. While comparing its average daily trading volume of 2.36 million shares, we see that about 2.23 million changed hands on the day. The stock is currently trading 5.27% above its 20-day simple moving average (SMA20), while that difference is up 3.07% for SMA50 and it goes to -5.22% lower than SMA200.

    Ares Capital Corporation (NASDAQ: ARCC) currently have 422.62M outstanding shares and institutions hold larger chunk of about 36.16% of that. Holding of mutual funds in the company is about — while other institutional holders and individual stake holders have control over — and — of the stake respectively.

    The stock has a current market capitalization of $6.34B. PE ratio of stock for trailing 12 months is 145.63, while it has posted earnings per share of $0.10 in the same period. Volatility of a stock is a metric used to know how much the price of that stock is under influence and for ARCC, volatility over the week remained 2.20% while standing at 2.26% over the month.

    Analysts are in expectations that Ares Capital Corporation (ARCC) stock would likely to be making an EPS of $0.38 in the current quarter, while forecast for next quarter ESPS is $0.39 and it is $1.64 for next year. For the current quarter EPS, analysts have given the company a lowest target $0.35 which is $0.41 at the higher side of the target for the same. When we compare those targets with actual EPS, we find that company posted an EPS of $0.48 in the same quarter a year ago. Stock’s fiscal year EPS is expected to drop by -15.90% while it is estimated to increase by 3.10% in next year. EPS is likely to shrink at an annualized rate of 3.00% for next 5-years, compared to annual growth of 4.42% made by the stock over the past 5-years.

    Analysts at 16 brokerage firms have issued recommendations for the Ares Capital Corporation (ARCC)’s stock and average of those rates the stock at a “Strong Buy” and assign it a score of 1.70. Out of those 16 Wall Street analysts, 14 recommended a “Buy” rating, while 1 were in favor recommending the stock as a “Hold” and 0 analyst recommended the stock as “Sell”.

    Digging deeper we find that several firms have released their research notes about the support levels of the stock. Most recent of them is a note released by Raymond James on April 16, 2020 offering an Outperform rating for the stock and assigned a target price of $14 to it. Coverage by BofA/Merrill stated Ares Capital Corporation (ARCC) stock as a Buy in their note to investors on April 13, 2020, suggesting a price target of $16 for the stock. On April 02, 2020, Compass Point Upgrade their recommendations, while on November 12, 2019, RBC Capital Mkts Initiated their ratings for the stock with a price target of $20. Stock get a Mkt perform rating from Raymond James on October 22, 2019.


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