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Upturn AI SWOT - About
ARCC 
Ares Capital Corporation (ARCC)
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Upturn Advisory Summary
08/28/2025: ARCC (2-star) is a SELL. SELL since 4 days. Profits (2.99%). Updated daily EoD!
Upturn Star Rating
Below Average Performance
These Stocks/ETFs, based on Upturn Advisory, often underperform the market, warranting careful consideration before investing.
Number of Analysts
13 Analysts rated it
Moderately tracked stock, growing coverage, gaining market and investor attention.
1 Year Target Price $23.27
1 Year Target Price $23.27
| 7 | Strong Buy |
| 4 | Buy |
| 2 | Hold |
| 0 | Sell |
| 0 | Strong Sell |
Analysis of Past Performance
Type Stock | Historic Profit 28.01% | Avg. Invested days 74 | Today’s Advisory SELL |
Upturn Star Rating | Upturn Advisory Performance  5.0 | Stock Returns Performance  3.0 |
| Profits based on simulation | Last Close 08/28/2025 |
Key Highlights
Company Size Large-Cap Stock | Market Capitalization 15.74B USD | Price to earnings Ratio 10.94 | 1Y Target Price 23.27 |
Price to earnings Ratio 10.94 | 1Y Target Price 23.27 | ||
Volume (30-day avg) 13 | Beta 0.74 | 52 Weeks Range 17.87 - 23.41 | Updated Date 08/27/2025 |
52 Weeks Range 17.87 - 23.41 | Updated Date 08/27/2025 | ||
Dividends yield (FY) 8.63% | Basic EPS (TTM) 2.04 |
Earnings Date
Report Date - | When - | Estimate - | Actual - |
Profitability
Profit Margin 44.94% | Operating Margin (TTM) 72.21% |
Management Effectiveness
Return on Assets (TTM) 5.04% | Return on Equity (TTM) 10.25% |
Valuation
Trailing PE 10.94 | Forward PE 11.15 | Enterprise Value 29291425792 | Price to Sales(TTM) 5.23 |
Enterprise Value 29291425792 | Price to Sales(TTM) 5.23 | ||
Enterprise Value to Revenue 19.84 | Enterprise Value to EBITDA 10.19 | Shares Outstanding 705366976 | Shares Floating - |
Shares Outstanding 705366976 | Shares Floating - | ||
Percent Insiders 0.55 | Percent Institutions 32.89 |
Upturn AI SWOT
Ares Capital Corporation
Company Overview
History and Background
Ares Capital Corporation (ARCC) was founded in 2004 and is a leading specialty finance company that provides debt and equity financing solutions to U.S. middle market companies. It has grown through strategic acquisitions and organic growth to become one of the largest BDCs.
Core Business Areas
- Direct Lending: Provides first lien senior secured loans, second lien senior secured loans, and mezzanine debt to U.S. middle market companies. This is the core revenue driver.
- Equity Investments: Invests in preferred and common equity of portfolio companies, often alongside debt investments, to enhance returns.
- Other: Includes investment in a Senior Loan Program and other portfolio investments.
Leadership and Structure
The company is led by Kipp deVeer, CEO. Ares Capital operates as a Business Development Company (BDC) and is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.
Top Products and Market Share
Key Offerings
- First Lien Senior Secured Loans: These loans are secured by the borrower's assets, providing a lower-risk investment for ARCC. ARCC is a major player in this market but specific market share data is difficult to ascertain; competition includes other BDCs and private credit funds.
- Second Lien Senior Secured Loans: These loans have a secondary claim on the borrower's assets, offering higher yields but also higher risk. Market share is competitive with other BDCs.
- Mezzanine Debt: This is subordinated debt with equity components, offering potentially high returns. Ares competes with other private credit funds and BDCs.
- Equity Co-Investments: Minority equity stakes in companies alongside debt to boost returns. Competitors include other BDCs and private equity firms.
Market Dynamics
Industry Overview
The BDC industry is driven by the need for capital among middle-market companies, who often face challenges accessing traditional bank loans. The industry is sensitive to interest rate fluctuations and economic cycles.
Positioning
Ares Capital is one of the largest BDCs, providing it with scale advantages in sourcing deals and managing a diversified portfolio. Its relationship with Ares Management also provides access to expertise and resources. The firm is highly regarded as a top tier BDC.
Total Addressable Market (TAM)
The TAM for private credit to middle-market companies is estimated to be in the trillions of dollars. Ares Capital Corporation benefits from the substantial unmet demand for debt capital among middle-market companies, which are often underserved by traditional lenders. Ares is well-positioned to address a significant portion of this market.
Upturn SWOT Analysis
Strengths
- Scale and diversification
- Experienced management team
- Strong relationship with Ares Management
- Proven track record of generating returns
- Access to capital markets
Weaknesses
- External management structure
- Sensitivity to interest rate changes
- Credit risk associated with middle-market lending
- Reliance on debt financing
- Potential for conflicts of interest
Opportunities
- Growing demand for private credit
- Expansion into new asset classes
- Strategic acquisitions
- Increasing regulatory scrutiny of banks
- Favorable demographic trends among business owners
Threats
- Economic downturn
- Increased competition from other BDCs and private credit funds
- Rising interest rates
- Regulatory changes
- Deterioration in credit quality
Competitors and Market Share
Key Competitors
- Main Street Capital (MAIN)
- Prospect Capital Corporation (PSEC)
- FS KKR Capital Corp. (FSK)
- Blackstone Secured Lending Fund (BXSL)
Competitive Landscape
Ares Capital's size and scale provide advantages in sourcing deals and managing a diversified portfolio. Competition is intense among BDCs and private credit funds.
Major Acquisitions
American Capital
- Year: 2017
- Acquisition Price (USD millions): 3400
- Strategic Rationale: Expanded Ares Capital's investment portfolio and increased its market share in the middle-market lending space.
Growth Trajectory and Initiatives
Historical Growth: Ares Capital has grown its investment portfolio through organic origination and strategic acquisitions.
Future Projections: Analysts project continued growth in investment income driven by demand for private credit. Earnings are expected to grow modestly.
Recent Initiatives: Recent initiatives include expansion into new industry sectors, focus on higher-quality investments, and managing credit risk.
Summary
Ares Capital is a leading BDC with a solid history and strong ties to Ares Management. It benefits from scale and diversification, but faces interest rate and credit risks. Strategic acquisitions have historically supported growth, but the external management structure poses potential conflicts. The firm appears positioned to capitalize on the growing private credit market if it manages risks effectively.
Peer Comparison
Sources and Disclaimers
Data Sources:
- Ares Capital Corporation SEC Filings
- Analyst Reports
- Industry Publications
- Company Website
Disclaimers:
This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on your own research and due diligence.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About Ares Capital Corporation
Exchange NASDAQ | Headquaters Los Angeles, CA, United States | ||
IPO Launch date 2004-10-06 | CEO, Partner & Co-Head of U.S. Direct Lending Mr. Kort Schnabel | ||
Sector Financial Services | Industry Asset Management | Full time employees - | Website https://www.arescapitalcorp.com |
Full time employees - | Website https://www.arescapitalcorp.com | ||
Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It invest in the United States based companies. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
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