Why Is Ares Capital (ARCC) Up 4.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Ares Capital (ARCC). Shares have added about 4.1% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Ares Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Ares Capital Q3 Earnings Miss as Expenses Increase Y/YAres Capital’s third-quarter 2024 core earnings of 58 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line reflected a decline of 1.7% from the prior-year quarter.The results were primarily affected by an increase in expenses. Nonetheless, an improvement in the total investment income and the company’s robust portfolio activities supported the results to some extent.GAAP net income was $394 million or 62 cents per share, down from $500 million or 89 cents per share in the prior-year quarter.Total Investment Income Improves, Expenses RiseTotal investment income was $775 million, up 18.3% year over year. The rise was largely driven by an increase in interest income from investments, capital structuring service fees and dividend income. The top line surpassed the Zacks Consensus Estimate of $767 million.Total quarterly expenses were $402 million, up 10.7% year over year. The increase was due to a rise in all the components except capital gains incentive fee charges and administrative fees.Portfolio Activities RobustIn the third quarter, the company made gross commitments worth $3.92 billion to new and existing portfolio companies. This compares with $1.6 billion of gross commitments in the prior-year quarter.Further, the company exited $2.6 billion of commitments compared with $1.28 billion a year ago.The fair value of Ares Capital’s portfolio investments was $25.9 billion as of Sept. 30, 2024.The fair value of accruing debt and other income-producing securities was $23.3 billion.Balance Sheet StrongAs of Sept. 30, 2024, the company’s cash and cash equivalents totaled $486 million, down from $535 million as of Dec. 31, 2023.Ares Capital had $4.5 billion available for additional borrowings under the existing credit facilities as of Sept. 30, 2024. Total outstanding debt was $13.5 billion.As of Sept. 30, 2024, total assets were $27.1 billion and stockholders’ equity was $12.8 billion.Net asset value was $19.77 per share, up from $19.24 as of Dec. 31, 2023.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates review.VGM ScoresAt this time, Ares Capital has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ares Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks