Ares Capital (NASDAQ:ARCC) Releases Earnings Results, Hits Expectations

Ares Capital (NASDAQ:ARCC) announced its quarterly earnings results on Wednesday. The investment management company reported $0.47 earnings per share (EPS) for the quarter, meeting analysts’ consensus estimates of $0.47, FiscalAI reports. The company had revenue of $768.00 million for the quarter, compared to the consensus estimate of $770.19 million. Ares Capital had a return on equity of 9.85% and a net margin of 37.30%.During the same quarter in the previous year, the business earned $0.50 EPS.

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

• Core earnings remained stable: Second-quarter Core EPS was $0.47, consistent with the prior quarter, while management maintained the $0.48 quarterly dividend. ARCC also reported approximately $988 million, or $1.38 per share, of taxable spillover income available for future distributions.
• Portfolio credit performance was generally healthy: Borrower EBITDA grew approximately 8% year over year, equity cushions remained above 50%, and non-accruals at cost were 2.4%, below ARCC’s historical average. Management said software investments were performing well and that higher AI-risk software exposure represented less than 50 basis points of the portfolio at fair value.
• Balance-sheet flexibility improved: ARCC ended the quarter with roughly $6 billion of available liquidity, modest net leverage of 1.12x debt-to-equity, and no additional unsecured note maturities in 2026. Its new $1 billion commercial paper program and other refinancing actions could lower funding costs and diversify capital sources.
• Deal activity was subdued but showed signs of recovery: ARCC originated $2.6 billion of commitments, with 75% involving existing borrowers, while June and July transaction pipelines improved. Management emphasized that it remained highly selective as deal quality weakened during parts of the quarter, but said larger upper-middle-market opportunities offered better terms and risk-adjusted returns.
• NAV declined modestly and industry credit normalization remains a risk: NAV fell $0.24 per share to $19.35, primarily due to market-driven valuation changes. Management expects non-accruals across the broader BDC industry to trend toward historical averages, although it said no specific sector was driving weakness in ARCC’s portfolio.

Ares Capital Price Performance

Shares of ARCC opened at $18.71 on Thursday. Ares Capital has a fifty-two week low of $17.40 and a fifty-two week high of $22.93. The firm’s 50-day simple moving average is $18.67 and its two-hundred day simple moving average is $18.92. The stock has a market cap of $13.43 billion, a PE ratio of 11.48 and a beta of 0.56. The company has a debt-to-equity ratio of 1.13, a quick ratio of 1.40 and a current ratio of 1.40.

Ares Capital Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Wednesday, September 30th. Shareholders of record on Tuesday, September 15th will be issued a $0.48 dividend. This represents a $1.92 dividend on an annualized basis and a yield of 10.3%. The ex-dividend date is Tuesday, September 15th. Ares Capital’s dividend payout ratio is 117.79%.

Hedge Funds Weigh In On Ares Capital

A number of hedge funds have recently added to or reduced their stakes in the company. Onyx Bridge Wealth Group LLC lifted its position in Ares Capital by 6.2% during the fourth quarter. Onyx Bridge Wealth Group LLC now owns 53,052 shares of the investment management company’s stock valued at $1,073,000 after purchasing an additional 3,107 shares in the last quarter. First Citizens Bank & Trust Co. grew its stake in Ares Capital by 5.3% during the fourth quarter. First Citizens Bank & Trust Co. now owns 10,530 shares of the investment management company’s stock valued at $213,000 after acquiring an additional 532 shares in the last quarter. NewEdge Advisors LLC grew its position in shares of Ares Capital by 15.2% during the fourth quarter. NewEdge Advisors LLC now owns 154,514 shares of the investment management company’s stock valued at $3,126,000 after purchasing an additional 20,339 shares in the last quarter. Empowered Funds LLC increased its stake in Ares Capital by 2.1% in the 4th quarter. Empowered Funds LLC now owns 38,803 shares of the investment management company’s stock worth $785,000 after acquiring an additional 780 shares during the last quarter. Finally, Garton & Associates Financial Advisors LLC purchased a new stake in Ares Capital during the fourth quarter valued at $44,000. 27.38% of the stock is currently owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

A number of analysts recently commented on ARCC shares. Wall Street Zen raised Ares Capital from a “sell” rating to a “hold” rating in a research note on Saturday, July 25th. Truist Financial cut their target price on shares of Ares Capital from $23.00 to $22.00 and set a “buy” rating on the stock in a research note on Wednesday, April 29th. B. Riley Financial reduced their price target on shares of Ares Capital from $22.00 to $20.00 and set a “buy” rating on the stock in a research report on Wednesday, April 29th. Citizens Jmp cut their price objective on Ares Capital from $23.00 to $22.00 and set a “market outperform” rating on the stock in a research report on Wednesday, April 22nd. Finally, Wells Fargo & Company reiterated an “equal weight” rating and set a $19.00 target price (down from $20.00) on shares of Ares Capital in a report on Friday, June 12th. Eight research analysts have rated the stock with a Buy rating and three have issued a Hold rating to the stock. Based on data from MarketBeat, Ares Capital presently has a consensus rating of “Moderate Buy” and an average price target of $20.50.

Key Headlines Impacting Ares Capital

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

• Positive Sentiment: Net investment income was $359 million, or $0.50 per share, while adjusted earnings of $0.47 per share matched analysts’ estimates. Total investment income rose to $768 million from $745 million a year earlier. Ares Capital second-quarter results
• Positive Sentiment: The board declared a quarterly dividend of $0.48 per share, payable September 30 to shareholders of record September 15. The payout supports ARCC’s roughly 10% yield and reinforces its appeal to income-focused investors. Ares Capital dividend announcement
• Positive Sentiment: Management emphasized stable recurring income, strong liquidity and new investment commitments of approximately $2.6 billion, including $2.2 billion funded. ARCC ended the quarter with $383 million in cash and about $6.7 billion of borrowing capacity. Ares Capital earnings call highlights
• Neutral Sentiment: Revenue of $768 million was slightly below the $770.19 million consensus, and earnings declined from $0.50 per share in the year-ago quarter. The result was broadly in line with expectations, limiting the surprise factor. Ares Capital key metrics comparison
• Negative Sentiment: GAAP net income fell to $171 million, or $0.24 per share, from $361 million, or $0.52 per share, a year earlier, as realized and unrealized losses weighed on results. Net asset value also declined to $19.35 per share from $19.94 at year-end 2025. Ares Capital losses hit earnings
• Negative Sentiment: Investors remain concerned that a credit downturn or recession could increase portfolio defaults, reduce asset values and put pressure on ARCC’s high-yield dividend. Lower benchmark interest rates could also weigh on future investment income. Credit downturn risk to Ares Capital dividend

About Ares Capital

Ares Capital Corporation (NASDAQ: ARCC) is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm’s flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.