📊 ARCC Key Takeaways
Is Ares Capital Corp. (ARCC) a Good Investment?
ARCC exhibits deteriorating fundamentals with net income declining 14.7% YoY and EPS contracting 23.8%, indicating portfolio underperformance or rising credit losses. Critically low profitability metrics (0.7% ROE, 0.3% ROA) demonstrate poor capital efficiency, while elevated leverage (1.13x debt-to-equity) amplifies downside risk in a stressed credit environment. The company's core investment function is generating inadequate returns relative to its capital structure and leverage burden.
ARES CAPITAL CORP shows solid scale, meaningful equity capital, and still-healthy absolute profitability, with $1.30B in net income and moderate leverage for a credit-focused lender. However, the year-over-year declines in net income and diluted EPS, combined with negative operating cash flow and high long-term debt, suggest fundamentals are stable but not clearly improving. The business looks financially sound enough to avoid a bearish stance, but current trend quality does not justify a more aggressive rating.
Why Buy Ares Capital Corp. Stock? ARCC Key Strengths
- Positive operating cash flow of $184M provides liquidity cushion
- Substantial asset base of $30.7B enables portfolio diversification across middle-market investments
- Free cash flow equals operating cash flow, indicating manageable capital expenditure discipline
- Large asset base and $14.32B of equity provide balance-sheet capacity and loss-absorption support
- Remains strongly profitable in absolute terms despite earnings pressure, with positive ROE of 9.1% and ROA of 4.2%
- Debt/equity of 1.12x is manageable for a lending platform and indicates leverage is not excessively stretched
ARCC Stock Risks: Ares Capital Corp. Investment Risks
- Steep EPS decline of 23.8% YoY significantly outpaces net income decline, signaling share dilution or secondary offerings diluting shareholder value
- Dangerously low return metrics (0.7% ROE, 0.3% ROA) indicate portfolio assets are underperforming or portfolio companies deteriorating in credit quality
- High leverage of 1.13x debt-to-equity combined with declining earnings creates covenant risk and limits financial flexibility if portfolio stress continues
- Net income fell 14.7% year over year and diluted EPS dropped 23.8%, pointing to weakening earnings momentum
- Operating cash flow was negative $1.72B, which can signal weaker cash conversion or portfolio funding pressure
- Long-term debt of $15.99B is substantial, leaving results sensitive to credit losses, funding costs, and refinancing conditions
Key Metrics to Watch
- Net income trend and quarterly profitability to confirm if decline stabilizes or accelerates
- Portfolio credit quality metrics and non-accrual loan ratios indicating investment portfolio health
- Debt covenant compliance and refinancing activity to assess financial flexibility under stress
- Net investment income and diluted EPS trend
- Non-accruals/credit quality and debt-to-equity trend
Ares Capital Corp. (ARCC) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The current ratio below 1.0x warrants monitoring of short-term liquidity.
ARCC Profit Margin, ROE & Profitability Analysis
ARCC vs Market Sector: How Ares Capital Corp. Compares
How Ares Capital Corp. compares to Market sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Ares Capital Corp. Stock Overvalued? ARCC Valuation Analysis 2026
Based on fundamental analysis, Ares Capital Corp. has mixed fundamental signals relative to the Market sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Ares Capital Corp. Balance Sheet: ARCC Debt, Cash & Liquidity
ARCC Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Ares Capital Corp.'s revenue has remained relatively flat over the 5-year period, with a 0% decline. The most recent EPS of $2.68 reflects profitable operations.
ARCC Revenue Growth, EPS Growth & YoY Performance
Ares Capital Corp. Dividends, Buybacks & Capital Allocation
ARCC SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Ares Capital Corp. (CIK: 0001287750)
📋 Recent SEC Filings
❓ Frequently Asked Questions about ARCC
What is the AI rating for ARCC?
Ares Capital Corp. (ARCC) has a Combined AI Rating of SELL from Claude (SELL) and ChatGPT (HOLD) with 71% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ARCC's key strengths?
Claude: Positive operating cash flow of $184M provides liquidity cushion. Substantial asset base of $30.7B enables portfolio diversification across middle-market investments. ChatGPT: Large asset base and $14.32B of equity provide balance-sheet capacity and loss-absorption support. Remains strongly profitable in absolute terms despite earnings pressure, with positive ROE of 9.1% and ROA of 4.2%.
What are the risks of investing in ARCC?
Claude: Steep EPS decline of 23.8% YoY significantly outpaces net income decline, signaling share dilution or secondary offerings diluting shareholder value. Dangerously low return metrics (0.7% ROE, 0.3% ROA) indicate portfolio assets are underperforming or portfolio companies deteriorating in credit quality. ChatGPT: Net income fell 14.7% year over year and diluted EPS dropped 23.8%, pointing to weakening earnings momentum. Operating cash flow was negative $1.72B, which can signal weaker cash conversion or portfolio funding pressure.
What is ARCC's revenue and growth?
Ares Capital Corp. reported revenue of N/A.
Does ARCC pay dividends?
Ares Capital Corp. pays dividends, with $345.0M distributed to shareholders in the trailing twelve months.
Where can I find ARCC SEC filings?
Official SEC filings for Ares Capital Corp. (CIK: 0001287750) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is ARCC's EPS?
Ares Capital Corp. has a diluted EPS of $0.13.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is ARCC a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, Ares Capital Corp. has a SELL rating with 71% confidence. Review the strengths and risks sections above before making a decision. This is not investment advice.
Is ARCC stock overvalued or undervalued?
Valuation metrics for ARCC: ROE of 0.7% (sector avg: 15%), net margin of N/A (sector avg: 12%). Compare these metrics with sector averages to assess valuation.
Should I buy ARCC stock in 2026?
Our dual AI analysis gives Ares Capital Corp. a combined SELL rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is ARCC's free cash flow?
Ares Capital Corp.'s operating cash flow is $184.0M, with capital expenditures of N/A.
How does ARCC compare to other Market stocks?
Vs Default sector averages: Net margin N/A (avg: 12%), ROE 0.7% (avg: 15%), current ratio N/A (avg: 1.8).