Analysts Set Ares Capital Price Target at $22.25 Amid Mixed Ratings

Ares Capital Corporation (NASDAQ:ARCC) has received a consensus rating of “Moderate Buy” from ten research firms. Analysts have set an average price target of $22.25 for the stock, reflecting a mix of hold and buy recommendations. Specifically, three analysts recommend holding the stock, while seven suggest a buy.

Recent analysis from various firms has resulted in adjusted price targets for Ares Capital. On October 14, 2023, UBS Group reduced its target from $22.50 to $21.00, assigning a “neutral” rating. In contrast, Capital One Financial set its price target at $22.50 just a few days earlier, on October 10, 2023. The Royal Bank of Canada also adjusted its target, lowering it from $24.00 to $23.00, while maintaining an “outperform” rating on October 29, 2023. Additionally, Wells Fargo & Company decreased its price objective from $23.00 to $21.00, assigning an “overweight” rating.

Ares Capital recently reported its quarterly earnings on October 28, 2023. The company achieved earnings per share (EPS) of $0.50, aligning with analysts’ expectations. Despite this, its revenue of $658 million fell short of the anticipated $766.48 million. This performance represents a modest 0.9% increase compared to the same quarter last year, during which Ares Capital reported an EPS of $0.58. Analysts predict that Ares Capital will post an EPS of $2.19 for the current year.

Upcoming Dividend and Shareholder Activity

In addition to its earnings report, Ares Capital has announced a quarterly dividend of $0.48 per share. This dividend will be distributed to shareholders on December 30, 2023, with the ex-dividend date set for December 15, 2023. This results in an annualized dividend of $1.92 and a yield of 9.8%. The company’s current dividend payout ratio stands at 96.00%.

Notably, CEO Michael Kort Schnabel acquired 13,000 shares of Ares Capital on October 31, 2023, at an average price of $20.39 per share, totaling approximately $265,070. Following this purchase, Schnabel’s total holdings increased to 28,000 shares, valued at roughly $570,920.

Institutional Involvement and Ownership Structure

Recent activities among institutional investors show significant interest in Ares Capital. City Holding Co. increased its holdings by 444.4% in the third quarter, now owning 1,225 shares worth about $25,000. Other institutions, such as SWAN Capital LLC and Fourth Dimension Wealth LLC, also established new positions in the company, valued at approximately $27,000 and $29,000, respectively. Overall, institutional and hedge fund investors currently hold 27.38% of Ares Capital’s stock.

Ares Capital Corporation specializes in providing financing solutions for middle-market companies, focusing on sectors such as manufacturing, business services, consumer products, healthcare, and information technology. The firm engages in various financial activities, including acquisition, recapitalization, and leveraged buyouts.

The company’s performance and strategic movements in the investment landscape continue to draw attention from analysts and investors alike, reflecting the dynamic nature of the financial sector.