National Securities reissued their buy rating on shares of Ares Capital (NASDAQ:ARCC) in a research report report published on Thursday. The firm currently has a $19.00 price target on the investment management company’s stock.
“• For 4Q17, ARCC posted core NII/share of $0.38, a penny shy of our estimate but matching the quarterly dividend. We were, and are still, puzzled by what we see as a discounted valuation on ARCC shares. The market seemed to, for whatever reason, think that ARCC would not achieve dividend coverage despite acquiring ACAS for cash and stock, issuing a significant amount of shares, and having to recycle many lower yielding or non-yielding assets into its own originations. We think that as the company continues to make excellent progress in the recycling of these assets and ramps the SDLP that core NII will cover the dividend even absent the $10.0 million in fee waivers the external manager has granted the company for up to 10 quarters subsequent to the ACAS deal closing. This will likely be up a positive catalyst for shares, in our opinion.
• Ares announced that its SDLP program is being expanded to more than double in size to $6.4 billion from $2.9 billion with additional capital from Varagaon, ARCC, and a “leading global insurance company” being invested in the program that had a yield by cost of 14.5% as of 12/31/17. As a reminder, the SSLP loans were repurchased and the program wound down entirely in 2Q17. As of 4Q17, the SDLP was only 4.1% of the portfolio at cost and CLOs were 1.0%, leaving ARCC ample room to grow its 30% basket with the SDLP and bolster earnings.
• NAV/share improved to $16.65 from $16.49 Q/Q as sizable realized losses of $123.0 million (primarily pertaining to Infilaw Holdings) was offset by unrealized gains of $215.0 million largely from reversal of prior period depreciation and some positive marks on the portfolio.
• We are revising our 2018 core NII/share estimate to $1.63 from $1.61 and are rolling out our 2019 core NII/share estimate of $1.70.,” the firm’s analyst wrote.
Other analysts also recently issued research reports about the stock. Oppenheimer set a $18.00 price objective on shares of Ares Capital and gave the stock a buy rating in a report on Tuesday, February 13th. Wedbush began coverage on shares of Ares Capital in a report on Monday, November 27th. They set an outperform rating and a $18.00 price objective for the company. Zacks Investment Research downgraded shares of Ares Capital from a hold rating to a sell rating in a report on Monday, November 6th. TheStreet upgraded shares of Ares Capital from a c+ rating to a b- rating in a report on Tuesday, December 12th. Finally, Compass Point initiated coverage on shares of Ares Capital in a research report on Wednesday, December 6th. They set a buy rating and a $17.50 target price for the company. One investment analyst has rated the stock with a sell rating, three have issued a hold rating and eight have assigned a buy rating to the company’s stock. Ares Capital presently has a consensus rating of Buy and an average target price of $18.00.
Ares Capital (NASDAQ:ARCC) last posted its quarterly earnings data on Tuesday, February 13th. The investment management company reported $0.38 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.37 by $0.01. Ares Capital had a net margin of 57.50% and a return on equity of 8.43%. The business had revenue of $307.00 million during the quarter, compared to the consensus estimate of $301.38 million. During the same quarter last year, the company posted $0.42 earnings per share. The firm’s quarterly revenue was up 17.6% compared to the same quarter last year. sell-side analysts expect that Ares Capital will post 1.56 EPS for the current year.
The firm also recently announced a quarterly dividend, which will be paid on Friday, March 30th. Shareholders of record on Thursday, March 15th will be given a dividend of $0.38 per share. The ex-dividend date is Wednesday, March 14th. This represents a $1.52 dividend on an annualized basis and a yield of 9.51%. Ares Capital’s dividend payout ratio is presently 96.82%.
In other Ares Capital news, CFO Penelope F. Roll bought 3,000 shares of the business’s stock in a transaction on Thursday, February 15th. The stock was purchased at an average price of $15.81 per share, for a total transaction of $47,430.00. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Insiders have acquired 3,600 shares of company stock valued at $57,082 in the last quarter. Company insiders own 0.45% of the company’s stock.
A number of large investors have recently modified their holdings of the business. WealthPLAN Partners LLC boosted its position in Ares Capital by 49.4% during the fourth quarter. WealthPLAN Partners LLC now owns 82,577 shares of the investment management company’s stock worth $1,298,000 after purchasing an additional 27,292 shares during the period. SWS Partners bought a new position in shares of Ares Capital in the fourth quarter valued at approximately $1,573,000. Csenge Advisory Group bought a new position in shares of Ares Capital in the fourth quarter valued at approximately $169,000. Dynasty Wealth Management LLC bought a new position in shares of Ares Capital in the fourth quarter valued at approximately $233,000. Finally, Macquarie Group Ltd. boosted its position in shares of Ares Capital by 8.9% in the fourth quarter. Macquarie Group Ltd. now owns 63,600 shares of the investment management company’s stock valued at $999,000 after acquiring an additional 5,200 shares during the period. Hedge funds and other institutional investors own 43.62% of the company’s stock.
Ares Capital Company Profile
Ares Capital Corporation is a specialty finance company. The Company operates as a closed-end, non-diversified management investment company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. It invests primarily in the United States middle-market companies.
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