Ares Capital: A Steady Dividend Stock with Modest Growth Ahead

Ares Capital shows robust total returns, but analysts forecast EPS to dip 7% in 2025. Investors need to assess potential against market competition and dividend yields before committing cash.

Date: 16-03-2025

AI Rating: 5

Earnings Per Share (EPS): Analysts expect Ares Capital's core EPS to decline by 7%, landing at $2.16 per share in 2025. This forecast indicates a potential dip in profitability, which could negatively affect investor sentiment and stock prices.

Revenue Growth: While specific revenue figures aren't provided, Ares Capital has grown its net assets per share from $14.43 in 2004 to $19.89 in 2024, signaling steady growth in its portfolio.

Net Income: There is no direct mention of net income, but the analysis of its debt and asset growth implies a focus on maintaining profitability despite increased risks.

Profit Margins: The report does not cover specific profit margin metrics, limiting insights into how efficiently Ares Capital operates in terms of revenue versus expenses.

Free Cash Flow (FCF): Specific FCF data is not mentioned, keeping insights on cash generation from operations vague.

Return on Equity (ROE): While not explicitly stated, the growing debt-to-equity ratio from 0.38 to 0.99 points to ongoing investments funded through shareholder equity, suggesting principles of equity management in the firm.

This analysis of Ares Capital indicates that while the stock has demonstrated significant long-term returns, the anticipated EPS decline could impact its attractiveness in the eyes of conservative investors looking for growth stocks. Dividend yield remains attractive at around 8.8% but must be weighed against potential competition and comparisons to industry peers. Overall, Ares remains a reliable investment, yet factors such as rising rates and performance against market peers should be kept in mind when considering future performance.

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