Ares Capital Corporation (ARCC, Financial) has experienced an unexpected surge in bearish options activity, with 5,778 put options traded, doubling the typical volume. The most active contracts include the June 2025 $17 puts and the May 2025 $19 puts, which together accounted for approximately 5,100 contracts.
The elevated interest in these puts has driven the Put/Call Ratio to 2.97, indicating a strong preference for puts over calls among traders. Additionally, the at-the-money implied volatility (IV) has increased by over one point, reflecting heightened market expectations for future stock movement.
Investors are likely positioning themselves ahead of Ares Capital's upcoming earnings report, scheduled for April 29th. This surge in put options suggests a cautious or bearish outlook among market participants regarding the company's near-term financial performance.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Ares Capital Corp (ARCC, Financial) is $23.17 with a high estimate of $26.00 and a low estimate of $21.00. The average target implies an upside of 11.54% from the current price of $20.77. More detailed estimate data can be found on the Ares Capital Corp (ARCC) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Ares Capital Corp's (ARCC, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Ares Capital Corp (ARCC, Financial) in one year is $38.50, suggesting a upside of 85.37% from the current price of $20.7698. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Ares Capital Corp (ARCC) Summary page.
Key Business Developments
Release Date: February 05, 2025
- NAV per Share: Record NAV per share of $19.89 at year-end 2024.
- GAAP Net Income per Share: $0.55 for Q4 2024, $2.44 for the full year 2024.
- Core Earnings per Share: $0.55 for Q4 2024.
- Total Portfolio at Fair Value: $26.7 billion at the end of Q4 2024.
- Weighted Average Yield on Debt and Other Income-Producing Securities: 11.1% at December 31, 2024.
- Debt-to-Equity Ratio: 0.99x net of available cash at the end of Q4 2024.
- Dividend: $0.48 per share declared for Q1 2025.
- Nonaccruals at Cost: 1.7% at the end of Q4 2024.
- Portfolio Companies: 550 companies at year-end 2024.
- New Investment Commitments: $3.8 billion in Q4 2024, $15 billion for the full year 2024.
- Backlog as of January 28, 2025: $1.8 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ares Capital Corp (ARCC, Financial) reported a record NAV per share of $19.89, marking the eighth consecutive quarter of NAV growth.
- The company achieved one of the most active origination years in its history, with $15 billion of new commitments, more than double the commitment volumes of 2023.
- ARCC's portfolio companies showed strong performance, with an organic weighted average LTM EBITDA growth rate of 11% in the fourth quarter.
- The company secured ratings upgrades from two major credit rating agencies, making it the highest-rated BDC among the three major rating agencies.
- ARCC declared a first quarter 2025 dividend of $0.48 per share, maintaining a stable or increasing dividend for over 15 consecutive years.
Negative Points
- GAAP net income per share for the fourth quarter of 2024 was $0.55, down from $0.62 in the prior quarter and $0.72 in the fourth quarter of 2023.
- Core earnings per share declined due to a decrease in portfolio yields, impacted by a nearly 100 basis point drop in base rates by the end of 2024.
- The weighted average yield on debt and other income-producing securities decreased to 11.1% at the end of 2024, down from 12.5% at the end of 2023.
- Nonaccrual rates at cost increased to 1.7%, up 40 basis points from the prior quarter and year-end 2023.
- The company is monitoring potential impacts from changes in new government policies, which could affect the direct lending landscape.
