Ares Capital Corporation (NASDAQ:ARCC)‘s stock had its “buy” rating reissued by analysts at National Securities in a report issued on Monday, August 7th. They currently have a $19.00 price target on the investment management company’s stock. National Securities’ price objective points to a potential upside of 19.87% from the stock’s previous close.
The analysts 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.
ARCC has been the topic of several other reports. BMO Capital Markets reiterated a “hold” rating and set a $15.00 price objective on shares of Ares Capital Corporation in a research report on Tuesday, April 11th. Jefferies Group LLC reiterated a “buy” rating and set a $19.50 price objective on shares of Ares Capital Corporation in a research report on Friday, July 14th. Janney Montgomery Scott reissued a “neutral” rating on shares of Ares Capital Corporation in a research note on Friday, May 5th. Zacks Investment Research lowered shares of Ares Capital Corporation from a “hold” rating to a “sell” rating in a research note on Tuesday, July 4th. Finally, Keefe, Bruyette & Woods reissued a “buy” rating and set a $18.50 target price on shares of Ares Capital Corporation in a research note on Friday, June 16th. Two analysts have rated the stock with a sell rating, two have assigned a hold rating and seven have given a buy rating to the company’s stock. The company currently has an average rating of “Hold” and an average target price of $18.06.
Shares of Ares Capital Corporation (ARCC) traded down 0.25% during midday trading on Monday, hitting $15.85. The company had a trading volume of 2,170,643 shares. Ares Capital Corporation has a 12 month low of $15.01 and a 12 month high of $17.87. The company has a 50-day moving average of $16.36 and a 200 day moving average of $16.92.
Ares Capital Corporation (NASDAQ:ARCC) last posted its quarterly earnings results on Wednesday, August 2nd. The investment management company reported $0.34 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate 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 business had revenue of $284 million during the quarter, compared to analyst estimates of $297.77 million. During the same quarter last year, the firm posted $0.50 EPS. On average, equities research analysts expect that Ares Capital Corporation will post $1.40 EPS for the current fiscal year.
Several hedge funds and other institutional investors have recently bought and sold shares of the company. Cetera Investment Advisers acquired a new stake in Ares Capital Corporation during the second quarter worth $476,000. Koch Industries Inc. boosted its stake in Ares Capital Corporation by 7,292.7% in the second quarter. Koch Industries Inc. now owns 861,474 shares of the investment management company’s stock worth $812,000 after buying an additional 849,821 shares during the last quarter. Verition Fund Management LLC boosted its stake in Ares Capital Corporation by 28.3% in the second quarter. Verition Fund Management LLC now owns 43,212 shares of the investment management company’s stock worth $708,000 after buying an additional 9,540 shares during the last quarter. Wilbanks Smith & Thomas Asset Management LLC acquired a new stake in Ares Capital Corporation during the second quarter worth $1,423,000. Finally, Nomura Holdings Inc. raised its position in Ares Capital Corporation by 7.1% in the second quarter. Nomura Holdings Inc. now owns 984,043 shares of the investment management company’s stock worth $16,120,000 after buying an additional 65,297 shares during the period. Institutional investors own 49.53% of the company’s stock.
Ares Capital Corporation Company Profile
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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