Fundamental analysis: Ares Capital Corporation (ARCC)

Awarener score: 5.9

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Bottom) and growth (Superb), and the company's inclination to return cash to the stockholders (Lacking).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 5.5

Business has been growing at an extremely fast pace. It's been top tier when measured against peer companies.
Ares Capital Corporation business varies wildly, ups and downs could be very frequent. It's very risky. It looks worse than most rivals.

Margins score: 9.0

ARCC profit margins -on goods and services sold- are usually meagre. They stand mediocre against rival companies.
Business profit on sales tends to be huge. It's more than average in relation to competitors.
Profits on sales made -available to repay debt and purchase properties- are usually huge. They remain in good shape compared to peers.
Earnings -before income taxes and interests on loans taken- tend to be huge in relation to total revenues. They're still well ranked against similar companies.
Profits -before income taxes- are usually huge considering total sales, and remain encouraging in relation to rivals.
Total net profit tends to be huge when confronted to sales. Company stands encouraging in relation to comparable firms.

Growth score: 5.1

Ares Capital Corporation profit -on goods and services sold- has been growing at a normal pace. It's been rather normal in relation to competitors.
In recent years, earnings -on operations- have been growing at a good step, which has been slightly better than comparable firms.
Profits -available to repay debt and purchase properties- have been growing at an extremely fast pace, which compares great when measured against peer enterprises.
Earnings -before income taxes and interests on loans taken- have been growing at an extremely fast tempo. It turns to be excellent in relation to similar stocks.
In past years, at least once the company lost money -before income taxes-. It was bottom tier against rivals.
In the previous years, the firm had at least a total net loss, and last-in-rank when measured against peer companies.
The company lost money at least once in the past years. It's been a disappointment compared to industry peers.

Miscellaneous score: 9.0

ARCC managed to pay no income taxes on profits made in the past years, sometimes even got a credit. It's been better than most peers.
The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 7.5

Ares Capital Corporation usually gets very good returns on the resources it controls. It proves encouraging in relation to peer firms.
The company normally gets good proceeds -on the resources directly invested in the business-. They remain close to average when compared to similar companies.
Profitability -in relation to owned resources- is usually quite good. It ranks encouraging in relation to competitors.
In the past, got very good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's similar to comparable enterprises.

Usage of Funds score: 3.8

ARCC on average doesn't generate genuine funds, so to buy or replace property, plants and equipment must either burn existing cash or increase debt. It stands similar to rival firms.
The relationship between capital expenditures and depreciation is not known, because of not enough inputs, which is a big question mark in relation to industry peers.
In the past twelve months it paid outstanding dividends, considering the current stock price. It came somewhat better than competitors.
In recent years, has slightly cut back dividend payments. The company has behaved close to average when compared to similar firms.
The company generates very few genuine funds. Dividend payments are usually on borrowed money, which isn't sustainable in the long run. Unless business prospects improve greatly, future payments could be at risk. Sustainability looks bottom tier against comparable companies.
The company usually enlarges quite a bit the pool of investors, resulting in more mouths feeding on the pie of profits. It remains lacking compared to peer enterprises.
Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands in a very weak position compared to rivals.
We do not have sufficient data to comment on buybacks and their sustainability. It still looks dubious against competitors.

Balance Sheet score: 5.8

Ares Capital Corporation has no intangible assets (like brands and goodwill) according to accounting books, which is safest. It happens to be top tier when measured against peer companies.
The company has roughly triple short-term resources than short-term obligations. Liquidity concerns are most likely unimportant. It turns to be rather normal in relation to similar firms.
A substantial part of resources controlled were provided for with financial debt. Creditors have as many claims on the company as shareholders. The situation is somewhat risky. It remains worse than most rival firms.
Controlled resources take time to be turned into cash and equivalents, which is somewhat risky. It looks almost average when measured against rivals.
For every dollar of short-term obligations, the company has more than enough dollars in cash and short-term receivables. It's rather normal in relation to peer firms.
For every dollar of short-term obligations, the company has enough dollars in cash and equivalents, which is slightly worse than similar enterprises.
Usually, sales are on somewhat less than three months credit. It still ranks below average when measured against peers.
Days of inventory outstanding are not known. It comes up as a big question mark against competitors.
We could not gauge the normal operating cycle of the company. It happens to be a mystery against peers.
Unfortunately, we had not enough data to estimate the days of payables outstanding. It ranks unknown against industry peers.
Cash conversion cycle remains unknown, due to not having enough inputs. It's incomparable against similar companies.
Company earns net interest income on its investments and therefore is in a quite comfortable financial position. It stands top-notch against rival firms.
Business earnings have usually been very low when measured against loans taken. Even significantly cutting back reinvesting in the business, it could take more than ten years to repay the obligations with current profitability. It ranks below average when measured against comparable enterprises.
Revenues are huge in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. Low property, plant, and equipment requirements, allows the company to keep more money to reward stockholders in the long run. It looks impressive in relation to similar firms.
Resources exploitation is virtually zero, as the firm hardly reports any sales. It's still mediocre against peer companies.

Valuation score: 5.0

Ares Capital Corporation looks very expensive in relation to profits and financial position. It happens to be below average when measured against competitors.
Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains close to average when compared to peers.
In the past twelve months, the company neither generated nor consumed funds. Whatever funds it could get, it reinvested in the business, which stands mediocre against similar companies.
In the past years the company hardly generated enough genuine funds to cover up for its business needs. Business prospects should improve enough to be in a better position to reward investors. It's still weak when measured against industry firms.
In the past twelve months, the company has enlarged the pool of investors by issuing new shares. Future profits need to be high enough to justify the measure, as the pie of earnings will now be split among somewhat more stockholders. It came up in a weak position compared to peer ventures.
The company is largely indebted. It should focus on loan repayment before rewarding stockholders. It looks worse than most similar enterprises.
Considering the past twelve months, traditional Price-to-Earnings relation might be more or less reasonable, but hardly cheap. It ranks almost average when measured against peer companies.
Comparing the current stock price with the past twelve-months revenues gives a huge relationship. The stock price might rely more on expectations and resources controlled than on anything else. It looks in a very weak position compared to rival firms.
The relation between the stock price and accounting book value might be reasonable. It's important both to check this metric through time and to compare it with rival companies. The company remains slightly better than peer firms.
In the past twelve months, the operating business earned some money when compared to the current stock price and financial position. It happens to be almost average when measured against industry peers.
In an alternate metric of bang for the buck, the company has usually shown a very good earnings power ability when measured against the current stock price and financial position. It's still lacking compared to peer companies.

Total score: 6.4

Company at a glance: Ares Capital Corporation (ARCC)

Sector, industry: Financial Services, Asset Management

Market Cap: 10.25 billions

Revenues TTM: 0.79 billions

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 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.