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What's in the Cards for Ares Capital (ARCC) in Q3 Earnings?

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Ares Capital Corporation (ARCC - Free Report) is scheduled to announce third-quarter 2021 results on Oct 26, before market open. Its revenues and earnings are anticipated to have improved in the quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results reflected an improvement in total investment income and solid portfolio activity. However, higher expenses hurt results to some extent.

Ares Capital has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 15.8%.

Ares Capital Corporation Price and EPS Surprise

 

Ares Capital Corporation Price and EPS Surprise

Ares Capital Corporation price-eps-surprise | Ares Capital Corporation Quote

Earnings & Sales Projections for Q3

The Zacks Consensus Estimate for third-quarter earnings is pegged at 44 cents, which has been unchanged over the past seven days. The figure indicates a rise of 12.8% from the year-ago quarter’s reported number.

The consensus estimate for sales of $438 million suggests 24.4% growth on a year-over-year basis.

Other Key Estimates for Q3

The Zacks Consensus Estimate for interest income from investments (constituting a significant portion of the company’s total investment income) is pegged at $326 million, indicating a 6.9% rise from the prior quarter’s reported figure.

However, the consensus estimate for capital structuring service fees is pegged at $50 million, suggesting a 46.2% sequential decline. The Zacks Consensus Estimate for dividend income of $51 million indicates a decline of 1.9% on a sequential basis.

The consensus estimate for other income is pegged at $11.95 million, suggesting a rise of 32.8% from the prior quarter’s reported figure.

Ares Capital has been witnessing higher expenses over the past several quarters. As it continues to invest in venture growth stage companies, operating expenses are expected to have been elevated in the third quarter as well.

Earnings Whispers

According to our quantitative model, it cannot be conclusively predicted whether Ares Capital will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Ares Capital has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy). While this increases the predictive power of ESP, we also need a positive Earnings ESP to be confident of an earnings beat.

Finance Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

Capital One Financial Corporation (COF - Free Report) is slated to report quarterly earnings on Oct 26. The company, with a Zacks Rank of 2 at present, has an Earnings ESP of +4.66%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for First Interstate BancSystem, Inc. (FIBK - Free Report) is +4.46%. This Zacks #3 Ranked company is also scheduled to report quarterly numbers on Oct 26.

Civista Bancshares, Inc. (CIVB - Free Report) is scheduled to release results on Oct 27. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +5.32%.

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