Ares Capital (ARCC) Registers a Bigger Fall Than the Market: Important Facts to Note

Ares Capital (ARCC) closed at $18.06 in the latest trading session, marking a -2.33% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 1.52%. Elsewhere, the Dow lost 1.56%, while the tech-heavy Nasdaq lost 1.78%.

Coming into today, shares of the private equity firm had lost 7.13% in the past month. In that same time, the Finance sector lost 5.37%, while the S&P 500 lost 2.25%.

Investors will be eagerly watching for the performance of Ares Capital in its upcoming earnings disclosure. On that day, Ares Capital is projected to report earnings of $0.49 per share, which would represent a year-over-year decline of 2%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $777.8 million, up 6.26% from the year-ago period.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $1.94 per share and revenue of $3.17 billion. These totals would mark changes of -3.48% and +3.82%, respectively, from last year.

Investors should also pay attention to any latest changes in analyst estimates for Ares Capital. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. At present, Ares Capital boasts a Zacks Rank of #3 (Hold).

Investors should also note Ares Capital's current valuation metrics, including its Forward P/E ratio of 9.52. This denotes a premium relative to the industry average Forward P/E of 8.02.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. With its current Zacks Industry Rank of 185, this industry ranks in the bottom 25% of all industries, numbering over 250.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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