Ares Capital (NASDAQ:ARCC) Posts Quarterly Earnings Results, Misses Estimates By $0.01 EPS

Ares Capital (NASDAQ:ARCC) posted its earnings results on Tuesday. The investment management company reported $0.47 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.01), FiscalAI reports. Ares Capital had a net margin of 42.56% and a return on equity of 9.89%. The business had revenue of $763.00 million for the quarter, compared to analysts’ expectations of $779.10 million. During the same period last year, the firm posted $0.50 earnings per share. Ares Capital’s quarterly revenue was up 4.2% on a year-over-year basis.

Here are the key takeaways from Ares Capital’s conference call:

• Company reported Core EPS of $0.47 (annualized ROE 9.6%) and said Core EPS plus $0.15 of net realized gains comfortably covered the quarter’s $0.48 dividend, which management is maintaining as stable.
• Management emphasized a healthy, diversified portfolio—607 companies, average position <20 bps—with low credit stress (non-accruals 2.1% at cost; 1.2% at fair value) and ~9% weighted LTM EBITDA growth.
• They see a market reset as an opportunity: spreads and fees are wider and leverage is lower on new deals (management cited ~50–75 bps of improved economics), with $3.2 billion of Q1 originations and a backlog of about $1.8 billion.
• GAAP net income fell to $0.13/share driven by market-driven unrealized losses from spread widening; NAV fell to $19.59 (down $0.35 q/q), and management said ~70% of marks this quarter were mark-to-market rather than credit impairment.
• Balance sheet and liquidity are strong with approximately $6 billion of available liquidity, recent unsecured issuance and a widened/expanded bank facility, and a debt-to-equity ratio near 1.1x to support opportunistic deployment.

Ares Capital Stock Performance

Ares Capital stock traded down $0.18 during mid-day trading on Wednesday, reaching $18.74. 1,686,188 shares of the stock traded hands, compared to its average volume of 7,233,135. The stock has a market capitalization of $13.45 billion, a PE ratio of 10.07 and a beta of 0.58. The company has a debt-to-equity ratio of 1.12, a current ratio of 1.70 and a quick ratio of 1.70. Ares Capital has a 12-month low of $17.40 and a 12-month high of $23.42. The business’s 50-day moving average is $18.52 and its 200-day moving average is $19.61.

Ares Capital Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Tuesday, June 30th. Investors of record on Monday, June 15th will be given a dividend of $0.48 per share. This represents a $1.92 dividend on an annualized basis and a yield of 10.2%. The ex-dividend date is Monday, June 15th. Ares Capital’s dividend payout ratio is 103.23%.

Insiders Place Their Bets

In other news, CEO Michael Kort Schnabel acquired 12,500 shares of Ares Capital stock in a transaction that occurred on Thursday, February 5th. The stock was bought at an average price of $19.13 per share, for a total transaction of $239,125.00. Following the completion of the transaction, the chief executive officer owned 40,500 shares in the company, valued at $774,765. The trade was a 44.64% increase in their ownership of the stock. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CFO Scott C. Lem acquired 5,186 shares of Ares Capital stock in a transaction that occurred on Friday, February 6th. The shares were purchased at an average price of $19.29 per share, with a total value of $100,037.94. Following the transaction, the chief financial officer owned 39,463 shares of the company’s stock, valued at $761,241.27. The trade was a 15.13% increase in their position. The disclosure for this purchase is available in the SEC filing. 0.49% of the stock is currently owned by corporate insiders.

Institutional Trading of Ares Capital

Hedge funds have recently bought and sold shares of the company. SWAN Capital LLC purchased a new stake in Ares Capital in the third quarter worth about $27,000. Quarry LP purchased a new stake in Ares Capital in the third quarter worth about $33,000. WFA of San Diego LLC purchased a new stake in Ares Capital in the second quarter worth about $36,000. Garton & Associates Financial Advisors LLC purchased a new stake in Ares Capital in the fourth quarter worth about $44,000. Finally, Advocate Investing Services LLC purchased a new stake in Ares Capital in the fourth quarter worth about $62,000. Hedge funds and other institutional investors own 27.38% of the company’s stock.

Key Headlines Impacting Ares Capital

Here are the key news stories impacting Ares Capital this week:

• Positive Sentiment: Board reaffirmed the dividend at $0.48 quarterly (?10% yield) — supports income-focused investors and reduces near-term distribution risk. Business Wire: Press Release
• Positive Sentiment: Management flagged a $1.8B backlog and said the year is off to a strong start — pipeline/backlog gives revenue visibility and supports future investment income. MSN: Backlog & Dividend Coverage
• Positive Sentiment: Net investment income rose after a noncash accounting gain (NII $398M / $0.55), which helped headline profitability despite markdowns — shows earnings can be supported by realized/unrealized accounting items. Yahoo Finance: Profit After Accounting Gain
• Neutral Sentiment: Q1 results showed a small operational miss (EPS $0.47 vs. $0.48 est.; revenue $763M vs. ~$779M est.) — modest shortfall but not a large shock. MarketBeat: Q1 Results Summary
• Neutral Sentiment: Software exposure (~22% of loans) was modestly trimmed and valuations were described as steady — mitigates a headline risk around SaaS defaults but keeps sector concentration visible. Reuters: Software Valuations Steady
• Negative Sentiment: Core earnings slipped slightly below the dividend and GAAP income fell sharply on markdowns — indicates mark-to-market volatility that can pressure distributable earnings if trends persist. Benzinga: Dividend Pressure Analysis
• Negative Sentiment: Analysts and articles flagged unrealized losses, spread widening and lower transaction activity — ongoing spread volatility could weigh on future earnings and NAV if credit conditions worsen. Investing.com: Unrealized Losses & Spread Widening

Analysts Set New Price Targets

ARCC has been the topic of several research analyst reports. Royal Bank Of Canada reduced their target price on Ares Capital from $22.00 to $21.00 and set an “outperform” rating on the stock in a research note on Wednesday. Truist Financial dropped their target price on Ares Capital from $23.00 to $22.00 and set a “buy” rating on the stock in a report on Wednesday. JPMorgan Chase & Co. dropped their target price on Ares Capital from $22.00 to $19.00 and set an “overweight” rating on the stock in a report on Friday, March 13th. Wells Fargo & Company dropped their target price on Ares Capital from $21.00 to $20.00 and set an “overweight” rating on the stock in a report on Thursday, February 5th. Finally, Wall Street Zen downgraded Ares Capital from a “hold” rating to a “sell” rating in a report on Saturday, February 7th. Eight analysts have rated the stock with a Buy rating and two have given a Hold rating to the stock. According to MarketBeat.com, the stock presently has an average rating of “Moderate Buy” and a consensus price target of $21.11.

About Ares Capital

Ares Capital Corporation (NASDAQ: ARCC) is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm’s flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.