Marginal growth in 2016
Ares Capital (ARCC) is expected to post earnings per share (or EPS) of $0.39 for the March quarter, which is in line with last year’s results. For 2016, the company is expected to post EPS of $1.58, reflecting 3% growth on a year-over-year basis. The stock has returned 9% over the past one month. However, it has declined by 12% over the past one year.
Ares reported fourth quarter EPS of $0.40 as against $0.42 in the prior-year quarter. The company’s net asset value stood at $5.2 billion, or $16.46 per share, as of December 31, 2015. This is down by 0.3% compared to last year, mainly due to lower deployment in the current year. The company’s portfolio investments at fair value stood at $9.1 billion as of December 31, 2015, as compared to $9.0 billion as of December 31, 2014.
Here’s how some of Ares Capital’s peers in investment management fared with their respective quarterly earnings:
- Prospect Capital (PSEC) beat estimates.
- BlackRock Capital Investment (BKCC) beat estimates.
- Blackstone (BX) missed estimates.
- KKR (KKR) missed estimates.
Together, these companies form 6.3% of the PowerShares Global Listed Private Equity Portfolio ETF (PSP).
Specialty finance company
Ares Capital is a specialty finance company that operates closed-end, non-diversified investment management businesses. The company acts as a closed-end fund and is regulated as a business development company. Its objective is to generate both current income and capital appreciation through debt and equity investments. It invests primarily in US middle-market companies.
Ares Capital focuses primarily on the following areas:
- corporate, non-syndicated senior debt, mezzanine debt, and non-control equity to middle-market companies
- project finance: high-yield senior debt and mezzanine debt to finance power generation projects
- venture finance: senior secured loans to early-stage and emerging growth companies backed by venture capital firms
Ares Capital invests in a variety of sectors including education, energy, restaurants, healthcare services, business services, food services, and financial services.