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How Ares Capital Corporation Performed in 3Q17

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Part 5
How Ares Capital Corporation Performed in 3Q17 PART 5 OF 6

Ares Capital Reports Premium Valuations

Higher valuations

On an NTM (next-12-months) basis, Ares Capital Corporation (ARCC) has reported a price-to-earnings ratio of ~10.6x. The average of its peers’ price-to-earnings ratio on an NTM basis stood at ~9.7x, which reflects the discounted valuations of Ares Capital.

Ares Capital Reports Premium Valuations

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Ares Capital’s competitors Prospect Capital (PSEC), Hercules Capital (HTGC), and Apollo Investment (AINV) reported price-to-earnings ratios on an NTM basis of ~9.4x, ~10.5x, and ~9.3x, respectively.

Ares Capital reported an increase in its net investment income per share from $0.29 in 2Q17 to $0.36 in 3Q17. This trend could be the main reason for the company’s premium valuations. However, the company reported a decline in the net asset value per share from $16.54 in 2Q17 to $16.49 in 3Q17.

Dividend yield

Ares Capital (ARCC) declared a quarterly dividend of $0.38 per share on November 2, 2017, which it is scheduled to pay on December 29, 2017. The amount of its quarterly dividend has remained the same during the past few quarters. From October 1, 2017, to October 26, 2017, the company has made exits amounting to $80.0 million of investment commitments.

Included in the above exits are investment commitments of $24.0 million, which were acquired on the back of the acquisition of American Capital (ACAS).

Ares Capital has a dividend yield of ~9.3%. Among its peers (XLF), BlackRock Capital Investment Corporation (BKCC), Hercules Capital (HTGC), and TPG Specialty Lending (TSLX) have dividend yields of ~10.7%, ~9.1%, and ~7.5%, respectively.

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