Ares Capital (NASDAQ:ARCC) Posts Quarterly Earnings Results, Misses Expectations By $0.02 EPS

Ares Capital (NASDAQ:ARCC) posted its earnings results on Tuesday. The investment management company reported $0.46 earnings per share for the quarter, missing the consensus estimate of $0.48 by ($0.02), FiscalAI reports. The firm had revenue of $763.00 million for the quarter, compared to analyst estimates of $776.34 million. During the same quarter last year, the firm posted $0.50 earnings per share. The business’s revenue was down 2.4% compared to the same quarter last year.

Here are the key takeaways from Ares Capital’s conference call:

• MFIC acquisition expected to be modestly accretive: Ares Capital agreed to acquire MidCap Financial Investment Corporation, adding roughly 200 portfolio companies and expanding ARCC to more than 800 borrowers and over 600 sponsor relationships. Management cited purchase discounts and ARCC’s lower cost of capital as the primary sources of accretion.
• Portfolio credit quality remained healthy: Borrowers delivered approximately 7% weighted-average organic EBITDA growth, while non-accruals held steady at 2.4% of cost and 1.4% at fair value. Leverage, interest coverage, loan-to-value ratios and risk ratings were broadly stable and favorable relative to historical averages.
• Strong liquidity and funding position: ARCC had approximately $7 billion of available liquidity, modest net leverage of 1.06 times debt to equity and no unsecured note maturities for the remainder of 2026. New long-term unsecured debt, a repriced securitization and a planned $750 million facility expansion further support investment capacity.
• Higher base rates could support earnings: Management estimates that each 100-basis-point increase in base rates adds approximately $0.02 per share to quarterly earnings, with the benefit expected to flow through over about a quarter. The company also maintained its $0.48 quarterly dividend and cited $983 million of taxable income spillover as support for dividend stability.
• Origination activity slowed amid market uncertainty: Volatility involving interest rates, inflation and global trade elongated M&A timelines, resulting in a below-average closing ratio and a more measured pace of new investments. Management said activity should improve, citing $1.1 billion of fourth-quarter commitments and a $2.5 billion backlog, but acknowledged continued selectivity and uncertainty.

Ares Capital Stock Down 0.1%

ARCC stock opened at $18.50 on Wednesday. The business has a 50 day moving average of $19.27 and a 200-day moving average of $19.06. Ares Capital has a 12-month low of $17.40 and a 12-month high of $21.14.

Ares Capital Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Tuesday, December 29th. Stockholders of record on Tuesday, December 15th will be paid a $0.48 dividend. This represents a $1.92 dividend on an annualized basis and a dividend yield of 10.4%. The ex-dividend date is Tuesday, December 15th.

Trending Headlines about Ares Capital

Here are the key news stories impacting Ares Capital this week:

• Positive Sentiment: Acquisition could improve scale and diversification. Ares Capital agreed to acquire MidCap Financial Investment Corporation (MFIC) in a stock-and-cash transaction valued at approximately $2.6 billion. The deal is expected to strengthen ARCC’s position as the largest publicly traded business development company, broaden its portfolio and potentially increase core earnings per share. The transaction is expected to close in the first half of 2027, subject to approvals. Ares Capital Corporation Agrees to Acquire MidCap Financial Investment Corporation
• Positive Sentiment: Dividend was maintained. ARCC declared a quarterly dividend of $0.48 per share, payable December 29 to shareholders of record as of December 15. The payout supports the stock’s roughly 10% yield and may appeal to income-focused investors. Ares Capital Announces Fourth Quarter 2026 Dividend
• Neutral Sentiment: Management emphasized potential deal upside. On the earnings call, executives highlighted the strategic rationale for the MFIC transaction and its possible contribution to future earnings, though benefits will depend on successful closing and integration. Ares Capital’s Earnings Call Highlights MFIC Deal Upside
• Negative Sentiment: Third-quarter results missed estimates. Core earnings were $0.46 per share versus the $0.48 consensus, while revenue of $763 million fell short of the $776.34 million estimate and declined 2.4% year over year. Earnings also decreased from $0.50 per share a year earlier, reflecting a slower transaction environment. Ares Capital Q3 Earnings and Revenues Miss Estimates
• Negative Sentiment: Dividend coverage and credit risks remain concerns. Commentary noted that the $0.48 dividend exceeded quarterly core earnings, while analysts also pointed to marked-down loans and broader portfolio risks. These issues could pressure sentiment despite the attractive yield. Ares Capital Double-Digit Yield, a Huge Acquisition, and a Major Warning

Analysts Set New Price Targets

ARCC has been the topic of several recent research reports. Citigroup reissued a “market outperform” rating on shares of Ares Capital in a research note on Wednesday. JPMorgan Chase & Co. decreased their target price on shares of Ares Capital from $19.00 to $18.50 and set an “overweight” rating on the stock in a report on Thursday, July 2nd. Weiss Ratings reiterated a “hold (c)” rating on shares of Ares Capital in a research report on Friday, September 4th. Truist Financial decreased their price target on shares of Ares Capital from $22.00 to $21.00 and set a “buy” rating for the company in a research report on Thursday, July 30th. Finally, Keefe, Bruyette & Woods lowered their target price on Ares Capital from $21.00 to $20.00 and set an “outperform” rating for the company in a report on Thursday, July 30th. Eight investment analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company. According to data from MarketBeat, the company currently has an average rating of “Moderate Buy” and a consensus target price of $20.39.

Ares Capital Company Profile

Ares Capital Corporation (NASDAQ: ARCC) is a business development company that provides financing to middle-market companies. The company primarily invests in first-lien senior secured loans, second-lien loans, subordinated debt, and, to a lesser extent, equity securities. Its investments are generally designed to support acquisitions, recapitalizations, refinancings, growth initiatives, and other corporate activities.

Founded in 2004, Ares Capital is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.