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

Ares Capital (ARCC) closed the most recent trading day at $17.14, moving +0.12% from the previous trading session. This change lagged the S&P 500's 0.67% gain on the day. Meanwhile, the Dow gained 0.82%, and the Nasdaq, a tech-heavy index, added 0.78%.

Heading into today, shares of the private equity firm had lost 1.15% over the past month, outpacing the Finance sector's loss of 1.59% and lagging the S&P 500's gain of 1.25% in that time.

Wall Street will be looking for positivity from ARCC as it approaches its next earnings report date. On that day, ARCC is projected to report earnings of $0.42 per share, which would represent year-over-year growth of 7.69%. Meanwhile, our latest consensus estimate is calling for revenue of $336.39 million, up 6.12% from the prior-year quarter.

ARCC's full-year Zacks Consensus Estimates are calling for earnings of $1.71 per share and revenue of $1.39 billion. These results would represent year-over-year changes of +1.79% and +4.34%, respectively.

Investors might also notice recent changes to analyst estimates for ARCC. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ARCC currently has a Zacks Rank of #2 (Buy).

Investors should also note ARCC's current valuation metrics, including its Forward P/E ratio of 10.01. This valuation marks a premium compared to its industry's average Forward P/E of 9.68.

Also, we should mention that ARCC has a PEG ratio of 3.34. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ARCC's industry had an average PEG ratio of 3.24 as of yesterday's close.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This group has a Zacks Industry Rank of 189, putting it in the bottom 26% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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