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Upturn AI SWOT - About
ARCC 
Ares Capital Corporation (ARCC)
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Upturn Advisory Summary
06/30/2025: ARCC (2-star) has a low Upturn Star Rating. Not recommended to BUY.
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
These Stocks/ETFs, based on Upturn Advisory, frequently surpass the market, reflecting reliable and trustworthy advice.
Year Target Price $22.88
Year Target Price $22.88
| 7 | Strong Buy |
| 4 | Buy |
| 2 | Hold |
| 0 | Under performing |
| 0 | Sell |
Analysis of Past Performance
Type Stock | Historic Profit 27.31% | Avg. Invested days 67 | Today’s Advisory Consider higher Upturn Star rating |
Upturn Star Rating | Upturn Advisory Performance  5.0 | Stock Returns Performance  3.0 |
| Profits based on simulation | Last Close 06/30/2025 |
Key Highlights
Company Size Large-Cap Stock | Market Capitalization 15.24B USD | Price to earnings Ratio 10.76 | 1Y Target Price 22.88 |
Price to earnings Ratio 10.76 | 1Y Target Price 22.88 | ||
Volume (30-day avg) 13 | Beta 0.73 | 52 Weeks Range 17.66 - 22.80 | Updated Date 06/30/2025 |
52 Weeks Range 17.66 - 22.80 | Updated Date 06/30/2025 | ||
Dividends yield (FY) 8.75% | Basic EPS (TTM) 2.04 |
Earnings Date
Report Date - | When - | Estimate - | Actual - |
Profitability
Profit Margin 43.5% | Operating Margin (TTM) 76.23% |
Management Effectiveness
Return on Assets (TTM) 5.37% | Return on Equity (TTM) 10.29% |
Valuation
Trailing PE 10.76 | Forward PE 10.92 | Enterprise Value 28396324864 | Price to Sales(TTM) 5.05 |
Enterprise Value 28396324864 | Price to Sales(TTM) 5.05 | ||
Enterprise Value to Revenue 19.61 | Enterprise Value to EBITDA 10.19 | Shares Outstanding 694182016 | Shares Floating - |
Shares Outstanding 694182016 | Shares Floating - | ||
Percent Insiders 0.56 | Percent Institutions 32.69 |
Analyst Ratings
Rating 4 | Target Price 22.88 | Buy 4 | Strong Buy 7 |
Buy 4 | Strong Buy 7 | ||
Hold 2 | Sell - | Strong Sell - | |
Strong Sell - |
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 focused on providing direct loans and other investments in private middle market companies in the United States. It is externally managed by Ares Capital Management LLC, a subsidiary of Ares Management Corporation.
Core Business Areas
- Direct Lending: Provides financing solutions, primarily senior secured loans, to middle-market companies to fund growth, acquisitions, recapitalizations, and restructurings.
- Equity Investments: Makes equity investments in portfolio companies, often alongside debt investments, to participate in their potential upside.
- Other Income: Generates income from management fees, transaction fees, and other ancillary services provided to portfolio companies.
Leadership and Structure
Kieran Goodwin is the Chief Executive Officer and President. The company is externally managed by Ares Capital Management LLC, overseen by a board of directors.
Top Products and Market Share
Key Offerings
- Senior Secured Loans: Provides first lien and second lien loans to middle-market companies. While specific market share data fluctuates, ARCC is a leading BDC in the direct lending space. Competitors include Owl Rock Capital Corporation (ORCC) and FS KKR Capital Corp (FSK). Revenue derived from these loans constitute the majority of total revenue.
- Subordinated Debt and Mezzanine Debt: Offers subordinated and mezzanine debt financing. Market share varies depending on the specific deal flow and focus. Competitors include Apollo Investment Corporation (AINV) and Golub Capital BDC (GBDC). Revenue contribution is less than that of senior secured loans but still significant.
- Equity Investments: Invests in equity positions, often alongside debt, to generate capital appreciation. Market share data is not readily available as equity investments are a component of overall investment strategy. Competitors are similar to the above, competing for overall middle market company deals.
Market Dynamics
Industry Overview
The specialty finance industry is characterized by providing capital to middle-market companies underserved by traditional lenders. Increased regulatory constraints on banks have fueled the growth of BDCs. Interest rates and credit spreads significantly impact profitability. There are approximately 50 publicly traded business development companies (BDCs).
Positioning
Ares Capital is one of the largest BDCs and possesses significant scale, a well-established platform, and a strong track record. It has access to Ares Management's broader investment capabilities and resources. Competitors are smaller, newer BDCs.
Total Addressable Market (TAM)
The total addressable market for middle-market lending is estimated to be in the trillions of dollars. ARCC's position gives it access to a large portion of this TAM through its extensive origination network and relationships. The US Private Credit market is estimated to be $1.6 Trillion.
Upturn SWOT Analysis
Strengths
- Scale and diversification
- Strong origination platform
- Experienced management team
- Access to Ares Management resources
- Proven track record
Weaknesses
- External management structure
- Exposure to credit risk in middle market
- Sensitivity to interest rate changes
- Reliance on capital markets for funding
- Potential conflicts of interest with Ares Management
Opportunities
- Growing demand for private credit
- Expansion into new investment strategies
- Strategic acquisitions of smaller BDCs
- Increased deal flow in underserved markets
- Capitalizing on market volatility
Threats
- Economic recession and credit defaults
- Increased competition from other lenders
- Regulatory changes impacting BDCs
- Rising interest rates increasing borrowing costs
- Geopolitical risks
Competitors and Market Share
Key Competitors
- Owl Rock Capital Corporation (ORCC)
- FS KKR Capital Corp (FSK)
- Golub Capital BDC (GBDC)
Competitive Landscape
ARCC benefits from its scale and access to Ares Management's resources. ORCC is a strong competitor with a similar focus. Smaller BDCs may focus on niche markets.
Major Acquisitions
American Capital
- Year: 2017
- Acquisition Price (USD millions): 3400
- Strategic Rationale: The acquisition increased ARCC's scale and diversification, expanding its investment portfolio and geographic reach.
Growth Trajectory and Initiatives
Historical Growth: ARCC has demonstrated growth through increased investment activity and strategic acquisitions. Growth is closely tied to market conditions and credit cycles.
Future Projections: Future growth is expected to be driven by continued demand for private credit and ARCC's ability to deploy capital effectively. Analyst estimates vary depending on macroeconomic outlook.
Recent Initiatives: Focus on growing its investment portfolio, managing credit risk, and maintaining a strong balance sheet. Explore new investment opportunities in specific sectors.
Summary
Ares Capital is a leading BDC with a strong platform, but its external management structure and exposure to credit risk should be considered. It benefits from Ares Management resources, yet faces competition and economic uncertainties. Its growth depends on effective capital deployment and private credit demand. The recent acquisition was great.
Peer Comparison
Sources and Disclaimers
Data Sources:
- Ares Capital Corporation Investor Relations
- SEC Filings
- Analyst Reports
- Company Press Releases
Disclaimers:
The data provided is for informational purposes only and should not be considered financial advice. Market conditions and company performance can change. Consult with a financial advisor before making any investment decisions.
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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