Ares Capital (ARCC) Down 1.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Ares Capital (ARCC). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Ares Capital due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.Ares Capital Q2 Earnings Miss Estimates as Expenses Rise Y/YAres Capital’s second-quarter 2025 core earnings of 50 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line also reflected a decline of 18% from the prior-year quarter.The results were primarily hurt by a decline in total investment income and higher expenses. Nonetheless, the company’s robust portfolio activities offered some support.GAAP net income was $361 million or 52 cents per share, compared with $322 million or 52 cents per share in the prior-year quarter.Total Investment Income Falls, Expenses RiseTotal investment income was $745 million, down 1.3% year over year. The fall was largely due to a decline in interest income from investments and capital structuring service fees. The top line lagged the Zacks Consensus Estimate of $746.7 million.Total quarterly expenses were $395 million, up 11% year over year. The rise was mainly due to higher interest and credit facility fees, and base management fee.Portfolio Activities RobustIn the second quarter, the company made gross commitments worth $2.57 billion to new and existing portfolio companies compared with $3.86 billion in the prior-year quarter.Further, the company exited $1.96 billion of commitments compared with $1.38 billion a year ago.The fair value of Ares Capital’s portfolio investments was $27.9 billion as of June 30, 2025.The fair value of accruing debt and other income-producing securities was $24.8 billion.Balance Sheet StrongAs of June 30, 2025, the company’s cash and cash equivalents totaled $447 million, down from $635 million as of Dec. 31, 2024.Ares Capital had $6.8 billion available for additional borrowings under the existing credit facilities as of June 30, 2025. Total outstanding debt was $14.1 billion.As of June 30, 2025, total assets were $29.1 billion and stockholders’ equity was $14 billion.Net asset value was $19.90 per share, up from $19.89 as of Dec 31, 2024.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a flat trend in estimates revision.VGM ScoresCurrently, Ares Capital has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.Outlook Ares Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ares Capital Corporation (ARCC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks