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Monday, October 19, 2020

Investor Confidence is Falling for Ares Capital Corporation (NASDAQ:ARCC)

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Ares Capital Corporation (ARCC) shares are trading at lower $14.09 and the avg recommendation for the stock is Strong Buy, while the current analyst price target stands at $15.88.

To add more color to this target, the company’s high over the last year is $19.33 and the low is $7.90. Over the last 52 weeks, ARCC is down -22.80% while the S&P 500 is up 18.31%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, ARCC reported a profit of $170.0 million. Ares Capital Corporation also saw revenues increase to $350.0 million. In addition, ARCC has free cash flow of $165.0 million as of 06-2020. The company’s EBITDA came in at $253.0 million which compares well with its peers.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. ARCC has a short ratio of 4.05 and outstanding shares of 422.62M.

Company Outlook

ARCC has seen increased volume after this news and investors are putting their support behind the value proposition. Traders will also note the company’s earnings per share came in at 0.10. Investors should also keep an eye on sector updates as ARCC has historically followed its peers on positive news.

All told, Ares Capital Corporation ARCC has strung together solid data and demonstrated underlying fundamentals. At its current valuation, ARCC represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Ares Capital Corporation ARCC is now commanding a market cap of 5.95B. ARCC is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of ARCC stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in ARCC, either long or short, and we have not been compensated for this article.

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