Ares Capital (NASDAQ:ARCC) Stock Dropped to Sell by Wall Street Zen

Wall Street Zen cut shares of Ares Capital (NASDAQ:ARCC) from a hold rating to a sell rating in a research note published on Saturday,Wall Street Zen reports.

Other equities research analysts have also issued research reports about the company. UBS Group raised Ares Capital from a “neutral” rating to a “buy” rating and set a $21.00 price objective on the stock in a report on Thursday. Citigroup reissued a “market outperform” rating on shares of Ares Capital in a research note on Wednesday. Weiss Ratings reissued a “hold (c)” rating on shares of Ares Capital in a report on Friday, September 4th. Keefe, Bruyette & Woods decreased their price target on Ares Capital from $21.00 to $20.00 and set an “outperform” rating on the stock in a research note on Thursday, July 30th. Finally, Truist Financial decreased their price target on Ares Capital from $22.00 to $21.00 and set a “buy” rating on the stock in a research note on Thursday, July 30th. Nine equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company’s stock. According to MarketBeat.com, the company presently has an average rating of “Moderate Buy” and a consensus target price of $20.39.

Ares Capital Stock Down 0.1%

ARCC stock opened at $19.11 on Friday. The stock has a market capitalization of $13.80 billion, a PE ratio of 15.66 and a beta of 0.61. The company has a fifty day moving average of $19.22 and a 200-day moving average of $19.03. The company has a debt-to-equity ratio of 1.08, a quick ratio of 1.28 and a current ratio of 1.00. Ares Capital has a one year low of $17.40 and a one year high of $21.14.

Ares Capital (NASDAQ:ARCC) last issued its quarterly earnings results on Tuesday, October 27th. The investment management company reported $0.46 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.48 by ($0.02). The firm had revenue of $763.00 million for the quarter, compared to analyst estimates of $776.34 million. Ares Capital had a return on equity of 9.72% and a net margin of 28.34%. The company’s revenue was down 2.4% compared to the same quarter last year. During the same quarter last year, the firm earned $0.50 earnings per share. As a group, analysts expect that Ares Capital will post 1.88 EPS for the current year.

Ares Capital Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Tuesday, December 29th. Investors of record on Tuesday, December 15th will be paid a $0.48 dividend. The ex-dividend date is Tuesday, December 15th. This represents a $1.92 annualized dividend and a dividend yield of 10.0%. Ares Capital’s dividend payout ratio (DPR) is 157.38%.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently added to or reduced their stakes in ARCC. Van ECK Associates Corp lifted its holdings in Ares Capital by 22.2% in the 2nd quarter. Van ECK Associates Corp now owns 13,306,095 shares of the investment management company’s stock valued at $246,562,000 after purchasing an additional 2,418,984 shares in the last quarter. Bank of America Corp DE purchased a new stake in shares of Ares Capital during the second quarter worth about $165,569,000. Generali Asset Management SPA SGR grew its holdings in shares of Ares Capital by 5.3% during the third quarter. Generali Asset Management SPA SGR now owns 7,950,908 shares of the investment management company’s stock worth $151,862,000 after buying an additional 402,913 shares in the last quarter. Legal & General Group Plc purchased a new stake in shares of Ares Capital during the second quarter worth about $120,538,000. Finally, HighTower Advisors LLC raised its position in shares of Ares Capital by 9.5% in the second quarter. HighTower Advisors LLC now owns 3,870,130 shares of the investment management company’s stock valued at $71,714,000 after buying an additional 335,197 shares during the last quarter. 27.38% of the stock is currently owned by institutional investors and hedge funds.

More Ares Capital News

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

• Positive Sentiment: UBS upgraded ARCC to “Buy” and set a $21 price target, implying roughly 10% upside from the referenced share price. The upgrade supports the bullish case that ARCC’s valuation and income profile remain attractive. UBS upgrade coverage
• Positive Sentiment: B. Riley Securities reiterated its Buy rating, indicating continued confidence in ARCC’s ability to generate shareholder returns despite recent earnings softness. B. Riley Buy rating
• Positive Sentiment: ARCC’s planned acquisition of MidCap Financial Investment Corporation (NASDAQ: MFIC) could expand its investment platform and portfolio scale. MFIC canceled its upcoming earnings call because of the pending transaction, confirming the deal is progressing. MidCap acquisition announcement
• Neutral Sentiment: Articles discussing the tax treatment of high-yield BDC dividends may increase investor awareness of ARCC’s ordinary-income taxation, but they do not represent a change in the company’s fundamentals or dividend policy. Dividend tax article
• Negative Sentiment: Third-quarter core EPS and net investment income declined to $0.46, below the $0.48 quarterly dividend and analysts’ $0.48 earnings estimate. Revenue also fell year over year, raising concerns about sustainable dividend coverage. Ares Capital third-quarter results
• Negative Sentiment: Analysts also pointed to a fourth consecutive quarterly decline in NAV and increased non-accrual investments. These credit-quality trends, combined with the earnings shortfall, led to a more cautious “Hold” view from some coverage despite ARCC trading below book value. Ares Capital Hold analysis

About Ares Capital

Ares Capital Corporation (NASDAQ: ARCC) is a business development company that provides financing to middle-market companies. The company primarily invests in first-lien senior secured loans, second-lien loans, subordinated debt, and, to a lesser extent, equity securities. Its investments are generally designed to support acquisitions, recapitalizations, refinancings, growth initiatives, and other corporate activities.

Founded in 2004, Ares Capital is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.