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Ares Capital (ARCC) Gains As Market Dips: What You Should Know

Zacks Equity Research

Ares Capital (ARCC) closed the most recent trading day at $18.56, moving +0.19% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.39%. Meanwhile, the Dow lost 0.95%, and the Nasdaq, a tech-heavy index, lost 0.83%.

Coming into today, shares of the private equity firm had lost 1.85% in the past month. In that same time, the Finance sector lost 0.24%, while the S&P 500 lost 0.1%.

Wall Street will be looking for positivity from ARCC as it approaches its next earnings report date. This is expected to be October 30, 2019. The company is expected to report EPS of $0.46, up 2.22% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $370.25 million, up 8.26% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.86 per share and revenue of $1.50 billion. These totals would mark changes of +10.71% and +12.12%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for ARCC. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ARCC is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, ARCC currently has a Forward P/E ratio of 9.94. For comparison, its industry has an average Forward P/E of 9.9, which means ARCC is trading at a premium to the group.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This group has a Zacks Industry Rank of 152, putting it in the bottom 41% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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