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Ares Capital (ARCC) Dips More Than Broader Markets: What You Should Know

·3 min read

Ares Capital (ARCC) closed the most recent trading day at $19.20, moving -0.52% from the previous trading session. This change lagged the S&P 500's 0.41% loss on the day. Meanwhile, the Dow lost 0.55%, and the Nasdaq, a tech-heavy index, added 0.1%.

Prior to today's trading, shares of the private equity firm had lost 4.27% over the past month. This has lagged the Finance sector's loss of 3.73% and was narrower than the S&P 500's loss of 5.13% in that time.

Wall Street will be looking for positivity from Ares Capital as it approaches its next earnings report date. The company is expected to report EPS of $0.49, up 4.26% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $511.53 million, up 15.73% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.93 per share and revenue of $1.96 billion. These totals would mark changes of +16.27% and +7.93%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Ares Capital. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.94% higher. Ares Capital is currently sporting a Zacks Rank of #1 (Strong Buy).

Valuation is also important, so investors should note that Ares Capital has a Forward P/E ratio of 10 right now. For comparison, its industry has an average Forward P/E of 9.58, which means Ares Capital is trading at a premium to the group.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 17, which puts it in the top 7% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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