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Here's Why Ares Capital (ARCC) Stock is Worth Betting on Now
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Ares Capital Corporation (ARCC - Free Report) is well poised for top-line growth, supported by robust loan originations and rising demand for customized financing. Also, its capital deployment policy seems impressive. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Further, analysts are bullish on the stock. Over the past 30 days, the Zacks Consensus Estimate for earnings has been revised 1.6% upward for both 2019 and 2020. It currently carries a Zacks Rank #2 (Buy).
Moreover, the company’s price performance looks decent. The stock has gained 6% over the past six months, outperforming 1.8% growth recorded by the industry.
Here are a few other aspects that make Ares Capital an attractive investment option now.
Revenue strength: The company’s total investment income witnessed a five-year (2014-2018) CAGR of 7.8%, driven mainly by the acquisition of American Capital in 2017. Also, given the improvement in economy and regulatory changes, the company’s top line is expected to rise further.
Its projected sales growth rate of 14.4% for 2019 (higher than the industry average of 4.4%) and 5.2% for 2020 indicates constant upward momentum in revenues.
Earnings growth: Ares Capital witnessed earnings growth of 2.6% over the last three-five years. Moreover, this uptrend is likely to continue in the near term as reflected by its projected earnings growth rate of more than 12.5% for 2019.
Notably, the company recorded an average positive earnings surprise of 9.3% over the trailing four quarters.
Capital deployments: In order to maintain its RIC status, Ares Capital distributes almost 90% of its taxable income. In February, the company hiked its quarterly dividend by 2.6%. Further, it has declared an additional 8 cents per share of dividends, which will be distributed in equal quarterly payments during 2019.
Also, the company has a share buyback plan worth $500 million, with expiration on Feb 15, 2020. As of Sep 30, 2019, nearly $493 million worth of shares were left to be repurchased. Given a solid liquidity position, Ares Capital is expected to continue enhancing shareholder value through efficient capital deployment activities.
Superior Return on Equity (ROE): Ares Capital’s ROE is 10.97%, higher than the industry average of 9.30%. This indicates that the company reinvests its cash more efficiently than the industry.
Other Stocks Worth Considering
Over the past 30 days, Hilltop Holdings (HTH - Free Report) witnessed an upward earnings estimate revision of 13% for 2019. Its share price has surged 39.6% year to date. The stock sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates of Moody's (MCO - Free Report) for 2019 have been revised 1.5% upward over the past 30 days. Its shares have jumped 56.2% so far this year. The stock carries a Zacks Rank #2.
Over the past 30 days, Eaton Vance’s (EV - Free Report) fiscal 2019 earnings estimates have remained unchanged. Shares of this Zacks Rank #2 company have rallied 36% so far this year.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
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Here's Why Ares Capital (ARCC) Stock is Worth Betting on Now
Ares Capital Corporation (ARCC - Free Report) is well poised for top-line growth, supported by robust loan originations and rising demand for customized financing. Also, its capital deployment policy seems impressive. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Further, analysts are bullish on the stock. Over the past 30 days, the Zacks Consensus Estimate for earnings has been revised 1.6% upward for both 2019 and 2020. It currently carries a Zacks Rank #2 (Buy).
Moreover, the company’s price performance looks decent. The stock has gained 6% over the past six months, outperforming 1.8% growth recorded by the industry.
Here are a few other aspects that make Ares Capital an attractive investment option now.
Revenue strength: The company’s total investment income witnessed a five-year (2014-2018) CAGR of 7.8%, driven mainly by the acquisition of American Capital in 2017. Also, given the improvement in economy and regulatory changes, the company’s top line is expected to rise further.
Its projected sales growth rate of 14.4% for 2019 (higher than the industry average of 4.4%) and 5.2% for 2020 indicates constant upward momentum in revenues.
Earnings growth: Ares Capital witnessed earnings growth of 2.6% over the last three-five years. Moreover, this uptrend is likely to continue in the near term as reflected by its projected earnings growth rate of more than 12.5% for 2019.
Notably, the company recorded an average positive earnings surprise of 9.3% over the trailing four quarters.
Capital deployments: In order to maintain its RIC status, Ares Capital distributes almost 90% of its taxable income. In February, the company hiked its quarterly dividend by 2.6%. Further, it has declared an additional 8 cents per share of dividends, which will be distributed in equal quarterly payments during 2019.
Also, the company has a share buyback plan worth $500 million, with expiration on Feb 15, 2020. As of Sep 30, 2019, nearly $493 million worth of shares were left to be repurchased. Given a solid liquidity position, Ares Capital is expected to continue enhancing shareholder value through efficient capital deployment activities.
Superior Return on Equity (ROE): Ares Capital’s ROE is 10.97%, higher than the industry average of 9.30%. This indicates that the company reinvests its cash more efficiently than the industry.
Other Stocks Worth Considering
Over the past 30 days, Hilltop Holdings (HTH - Free Report) witnessed an upward earnings estimate revision of 13% for 2019. Its share price has surged 39.6% year to date. The stock sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates of Moody's (MCO - Free Report) for 2019 have been revised 1.5% upward over the past 30 days. Its shares have jumped 56.2% so far this year. The stock carries a Zacks Rank #2.
Over the past 30 days, Eaton Vance’s (EV - Free Report) fiscal 2019 earnings estimates have remained unchanged. Shares of this Zacks Rank #2 company have rallied 36% so far this year.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our just-released Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Download Free Report Now >>