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Ares Capital (ARCC) Q1 Earnings & Revenues Beat, Stock Down
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Ares Capital Corporation’s (ARCC - Free Report) first-quarter 2021 core earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 42 cents. Moreover, the bottom line reflects a rise of 4.9% from the prior-year quarter’s reported number.
Results were aided by a rise in total investment income. Moreover, portfolio activity remained solid in the quarter. However, an increase in expenses hurt results to some extent. Probably because of this, shares of the company declined 1.2% following the earnings release.
GAAP net income was $373 million or 87 cents per share against a net loss of $612 million or $1.42 per share recorded in the prior-year quarter.
Total Investment Income Improves, Expenses Rise
Total investment income was $390 million, up 5.7% year over year. The rise was driven by an increase in capital structuring service fees, dividend income and other income. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $383.7 million.
Total expenses were $241 million, up 82.6% from the prior-year level.
Net investment income declined 38.5% year over year to $144 million.
Balance Sheet Strong
As of Mar 31, 2021, the company’s cash and cash equivalents (including restricted cash) totaled $356 million, up from $326 million as of Dec 31, 2020.
Moreover, Ares Capital had $4.9 billion available for additional borrowings under the existing credit facilities as of Mar 31, 2021. Total outstanding debt was $8.1 billion.
As of Mar 31, 2021, Ares Capital’s total assets amounted to $16 billion and stockholders’ equity was $7.6 billion.
Further, net asset value was $17.45 per share, up from $16.97 as of Dec 31, 2020.
Portfolio Activities Strong
Gross commitments worth $1.8 billion were made in the first quarter to new and existing portfolio companies. This compares with $1.3 billion worth of gross commitments in the prior-year quarter.
Further, in the quarter, the company exited $2.1 billion of commitments compared with $918 million a year ago.
The fair value of Ares Capital’s portfolio investments was $15.4 billion as of Mar 31, 2021, which included $13.6 billion in accruing debt and other income-producing securities.
Our Take
An increase in the demand for customized financing is expected to continue supporting Ares Capital. However, elevated expense levels (as witnessed in the first quarter as well) may hurt the bottom line.
Ares Capital Corporation Price, Consensus and EPS Surprise
Main Street Capital Corporation (MAIN - Free Report) and FS KKR Capital Corp. (FSK - Free Report) are scheduled to announce quarterly results on May 6 and May 10, respectively. Gladstone Investment Corporation (GAIN - Free Report) is scheduled to announce the March-end quarter’s results on May 11.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Ares Capital (ARCC) Q1 Earnings & Revenues Beat, Stock Down
Ares Capital Corporation’s (ARCC - Free Report) first-quarter 2021 core earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 42 cents. Moreover, the bottom line reflects a rise of 4.9% from the prior-year quarter’s reported number.
Results were aided by a rise in total investment income. Moreover, portfolio activity remained solid in the quarter. However, an increase in expenses hurt results to some extent. Probably because of this, shares of the company declined 1.2% following the earnings release.
GAAP net income was $373 million or 87 cents per share against a net loss of $612 million or $1.42 per share recorded in the prior-year quarter.
Total Investment Income Improves, Expenses Rise
Total investment income was $390 million, up 5.7% year over year. The rise was driven by an increase in capital structuring service fees, dividend income and other income. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $383.7 million.
Total expenses were $241 million, up 82.6% from the prior-year level.
Net investment income declined 38.5% year over year to $144 million.
Balance Sheet Strong
As of Mar 31, 2021, the company’s cash and cash equivalents (including restricted cash) totaled $356 million, up from $326 million as of Dec 31, 2020.
Moreover, Ares Capital had $4.9 billion available for additional borrowings under the existing credit facilities as of Mar 31, 2021. Total outstanding debt was $8.1 billion.
As of Mar 31, 2021, Ares Capital’s total assets amounted to $16 billion and stockholders’ equity was $7.6 billion.
Further, net asset value was $17.45 per share, up from $16.97 as of Dec 31, 2020.
Portfolio Activities Strong
Gross commitments worth $1.8 billion were made in the first quarter to new and existing portfolio companies. This compares with $1.3 billion worth of gross commitments in the prior-year quarter.
Further, in the quarter, the company exited $2.1 billion of commitments compared with $918 million a year ago.
The fair value of Ares Capital’s portfolio investments was $15.4 billion as of Mar 31, 2021, which included $13.6 billion in accruing debt and other income-producing securities.
Our Take
An increase in the demand for customized financing is expected to continue supporting Ares Capital. However, elevated expense levels (as witnessed in the first quarter as well) may hurt the bottom line.
Ares Capital Corporation Price, Consensus and EPS Surprise
Ares Capital Corporation price-consensus-eps-surprise-chart | Ares Capital Corporation Quote
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Finance Stocks
Main Street Capital Corporation (MAIN - Free Report) and FS KKR Capital Corp. (FSK - Free Report) are scheduled to announce quarterly results on May 6 and May 10, respectively. Gladstone Investment Corporation (GAIN - Free Report) is scheduled to announce the March-end quarter’s results on May 11.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>