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Ares Capital (ARCC) Gains But Lags Market: What You Should Know

Zacks Equity Research
·2-min read

Ares Capital (ARCC) closed at $18.94 in the latest trading session, marking a +0.48% move from the prior day. This move lagged the S&P 500's daily gain of 1.5%. Meanwhile, the Dow gained 1.44%, and the Nasdaq, a tech-heavy index, added 2.1%.

Prior to today's trading, shares of the private equity firm had gained 0.86% over the past month. This has outpaced the Finance sector's loss of 1.81% and the S&P 500's gain of 0.54% in that time.

Wall Street will be looking for positivity from ARCC as it approaches its next earnings report date. This is expected to be February 12, 2020. On that day, ARCC is projected to report earnings of $0.45 per share, which would represent no growth from the year-ago period. Meanwhile, our latest consensus estimate is calling for revenue of $387.39 million, up 12.29% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for ARCC. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.27% higher. ARCC is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, ARCC currently has a Forward P/E ratio of 10.13. This represents a premium compared to its industry's average Forward P/E of 9.98.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 113, which puts it in the top 45% 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.

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


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