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Ares Capital (ARCC) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Ares Capital (ARCC - Free Report) closed at $17.78, marking a -1.71% move from the previous day. This change lagged the S&P 500's 0.38% loss on the day. Elsewhere, the Dow lost 0.5%, while the tech-heavy Nasdaq lost 0.46%.

Prior to today's trading, shares of the private equity firm had lost 6.8% over the past month. This has lagged the Finance sector's loss of 5.85% and the S&P 500's loss of 6.69% in that time.

Wall Street will be looking for positivity from Ares Capital as it approaches its next earnings report date. The company is expected to report EPS of $0.43, down 18.87% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $466.61 million, up 1.66% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.77 per share and revenue of $1.89 billion. These totals would mark changes of +6.63% and +3.98%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Ares Capital. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.72% lower within the past month. Ares Capital currently has a Zacks Rank of #3 (Hold).

Investors should also note Ares Capital's current valuation metrics, including its Forward P/E ratio of 10.23. For comparison, its industry has an average Forward P/E of 9.98, which means Ares Capital is trading at a premium to the group.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 103, which puts it in the top 41% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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