Ares Capital (NASDAQ:ARCC) Stock Crosses Above 200-Day Moving Average – Here’s Why

Shares of Ares Capital Corporation (NASDAQ:ARCC) crossed above its 200-day moving average during trading on Thursday. The stock has a 200-day moving average of $19.04 and traded as high as $19.14. Ares Capital shares last traded at $19.12, with a volume of 5,821,915 shares trading hands.

Ares Capital News Summary

Here are the key news stories impacting Ares Capital this week:

• Positive Sentiment: UBS upgraded ARCC to “Buy” and set a $21 price target, implying roughly 10% upside from the referenced share price. The upgrade supports the bullish case that ARCC’s valuation and income profile remain attractive. UBS upgrade coverage
• Positive Sentiment: B. Riley Securities reiterated its Buy rating, indicating continued confidence in ARCC’s ability to generate shareholder returns despite recent earnings softness. B. Riley Buy rating
• Positive Sentiment: ARCC’s planned acquisition of MidCap Financial Investment Corporation (NASDAQ: MFIC) could expand its investment platform and portfolio scale. MFIC canceled its upcoming earnings call because of the pending transaction, confirming the deal is progressing. MidCap acquisition announcement
• Neutral Sentiment: Articles discussing the tax treatment of high-yield BDC dividends may increase investor awareness of ARCC’s ordinary-income taxation, but they do not represent a change in the company’s fundamentals or dividend policy. Dividend tax article
• Negative Sentiment: Third-quarter core EPS and net investment income declined to $0.46, below the $0.48 quarterly dividend and analysts’ $0.48 earnings estimate. Revenue also fell year over year, raising concerns about sustainable dividend coverage. Ares Capital third-quarter results
• Negative Sentiment: Analysts also pointed to a fourth consecutive quarterly decline in NAV and increased non-accrual investments. These credit-quality trends, combined with the earnings shortfall, led to a more cautious “Hold” view from some coverage despite ARCC trading below book value. Ares Capital Hold analysis

Wall Street Analysts Forecast Growth

Several research analysts recently issued reports on the company. Citigroup reaffirmed a “market outperform” rating on shares of Ares Capital in a research report on Wednesday. Wall Street Zen lowered Ares Capital from a “hold” rating to a “sell” rating in a research note on Saturday. Truist Financial dropped their price target on shares of Ares Capital from $22.00 to $21.00 and set a “buy” rating on the stock in a research report on Thursday, July 30th. UBS Group upgraded shares of Ares Capital from a “neutral” rating to a “buy” rating and set a $21.00 price objective for the company in a research report on Thursday. Finally, Weiss Ratings reaffirmed a “hold (c)” rating on shares of Ares Capital in a research note on Friday, September 4th. Nine equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company’s stock. According to MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $20.39.

Ares Capital Trading Down 0.1%

The company has a market cap of $13.80 billion, a PE ratio of 15.66 and a beta of 0.61. The company has a quick ratio of 1.28, a current ratio of 1.00 and a debt-to-equity ratio of 1.08. The business has a 50-day simple moving average of $19.22 and a 200-day simple moving average of $19.03.

Ares Capital (NASDAQ:ARCC) last issued its quarterly earnings results on Tuesday, October 27th. The investment management company reported $0.46 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.02). The business had revenue of $763.00 million for the quarter, compared to analyst estimates of $776.34 million. Ares Capital had a return on equity of 9.72% and a net margin of 28.34%. The firm’s revenue for the quarter was down 2.4% compared to the same quarter last year. During the same period in the prior year, the company posted $0.50 EPS. On average, analysts predict that Ares Capital Corporation will post 1.88 EPS for the current fiscal year.

Ares Capital Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Tuesday, December 29th. Investors of record on Tuesday, December 15th will be given a $0.48 dividend. The ex-dividend date of this dividend is Tuesday, December 15th. This represents a $1.92 dividend on an annualized basis and a dividend yield of 10.0%. Ares Capital’s dividend payout ratio is 157.38%.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently bought and sold shares of the business. Orion Capital Management LLC purchased a new stake in shares of Ares Capital in the second quarter valued at about $25,000. Fortitude Family Office LLC increased its stake in shares of Ares Capital by 145.2% during the third quarter. Fortitude Family Office LLC now owns 1,297 shares of the investment management company’s stock worth $25,000 after acquiring an additional 768 shares during the period. Continuum Advisory LLC purchased a new position in Ares Capital during the second quarter worth about $30,000. TOP Private Wealth LLC. purchased a new position in Ares Capital during the second quarter worth about $31,000. Finally, MADDEN SECURITIES Corp acquired a new stake in Ares Capital in the third quarter valued at about $46,000. 27.38% of the stock is owned by hedge funds and other institutional investors.

About Ares Capital

Ares Capital Corporation (NASDAQ: ARCC) is a business development company that provides financing to middle-market companies. The company primarily invests in first-lien senior secured loans, second-lien loans, subordinated debt, and, to a lesser extent, equity securities. Its investments are generally designed to support acquisitions, recapitalizations, refinancings, growth initiatives, and other corporate activities.

Founded in 2004, Ares Capital is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.