We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Ares Capital (ARCC) is Worth Adding to Your Portfolio Now
Read MoreHide Full Article
Favorable economic data, the Fed’s recent rate hikes and tax-reform bill benefits have boosted investors’ confidence in banking stocks. Therefore, some of these stocks can be profitable additions to your portfolio, backed by robust fundamentals and encouraging long-term prospects.
Thus, this is the right time to add a few banking stocks to your portfolio. Today, we bring one such stock — Ares Capital Corporation (ARCC - Free Report) — that continues to depict strong fundamentals and improving prospects.
Further, this Zacks Rank #2 (Buy) stock has appreciated more than 7.4% year to date as against the marginal decline registered by the industry.
Also, the company’s Zacks Consensus Estimate for current-year earnings have been revised 2.5% upward, over the last 30 days.
Why the Stock is Worth Buying
Revenue Strength: Ares Capital continues to witness top-line improvement. Since 2013, the company has recorded a continued rise in its sales with some annual volatility, witnessing five-year compound annual growth rate (CAGR) of nearly 7.1% in 2017.
The company’s projected sales growth (F1/F0) of 13.6% (as against the industry average of 5.6%) indicates constant upward momentum in revenues.
Earnings per Share Strength: Ares Capital recorded an average positive earnings surprise of 5.15%, over the trailing four quarters. Also, the company’s long-term (three to five years) estimated EPS growth rate of 3% promises rewards for investors over the long run. Notably, earnings are estimated to grow at a rate of 16.6% for 2018 and 3.9% for 2019.
Efficient Capital Deployment: Ares Capital’s dividend payout policy seems pretty decent. In July 2018, the company hiked its dividend by 2.6%. Before this, it had been paying a quarterly cash dividend of 38 cents per share since September 2012. In order to maintain its RIC status, the company distributes approximates 90% of its taxable income.
Superior ROE: Ares Capital’s Return on Equity (ROE) ratio is 9.34% compared with the industry’s average of 8.99%. This indicates that the company reinvests more efficiently compared to the industry.
Strong Leverage: The debt-to-equity ratio for Ares Capital is 0.62 compared with the S&P 500’s average of 0.67. This indicates greater financial stability for the company and lesser risk for shareholders.
E*TRADE has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 4.7% year to date. Currently, it sports a Zacks Rank of 1.
Great Southern Bancorp, Inc. (GSBC - Free Report) has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 4.6% year to date. It currently carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Why Ares Capital (ARCC) is Worth Adding to Your Portfolio Now
Favorable economic data, the Fed’s recent rate hikes and tax-reform bill benefits have boosted investors’ confidence in banking stocks. Therefore, some of these stocks can be profitable additions to your portfolio, backed by robust fundamentals and encouraging long-term prospects.
Thus, this is the right time to add a few banking stocks to your portfolio. Today, we bring one such stock — Ares Capital Corporation (ARCC - Free Report) — that continues to depict strong fundamentals and improving prospects.
Further, this Zacks Rank #2 (Buy) stock has appreciated more than 7.4% year to date as against the marginal decline registered by the industry.
Also, the company’s Zacks Consensus Estimate for current-year earnings have been revised 2.5% upward, over the last 30 days.
Why the Stock is Worth Buying
Revenue Strength: Ares Capital continues to witness top-line improvement. Since 2013, the company has recorded a continued rise in its sales with some annual volatility, witnessing five-year compound annual growth rate (CAGR) of nearly 7.1% in 2017.
The company’s projected sales growth (F1/F0) of 13.6% (as against the industry average of 5.6%) indicates constant upward momentum in revenues.
Earnings per Share Strength: Ares Capital recorded an average positive earnings surprise of 5.15%, over the trailing four quarters. Also, the company’s long-term (three to five years) estimated EPS growth rate of 3% promises rewards for investors over the long run. Notably, earnings are estimated to grow at a rate of 16.6% for 2018 and 3.9% for 2019.
Efficient Capital Deployment: Ares Capital’s dividend payout policy seems pretty decent. In July 2018, the company hiked its dividend by 2.6%. Before this, it had been paying a quarterly cash dividend of 38 cents per share since September 2012. In order to maintain its RIC status, the company distributes approximates 90% of its taxable income.
Superior ROE: Ares Capital’s Return on Equity (ROE) ratio is 9.34% compared with the industry’s average of 8.99%. This indicates that the company reinvests more efficiently compared to the industry.
Strong Leverage: The debt-to-equity ratio for Ares Capital is 0.62 compared with the S&P 500’s average of 0.67. This indicates greater financial stability for the company and lesser risk for shareholders.
Other Stocks to Consider
Greenhill & Co., Inc. has been witnessing upward estimate revisions for the past 60 days. Moreover, this Zacks #1 Ranked stock has rallied more than 24% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
E*TRADE has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 4.7% year to date. Currently, it sports a Zacks Rank of 1.
Great Southern Bancorp, Inc. (GSBC - Free Report) has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 4.6% year to date. It currently carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>