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Ares Capital (ARCC) Gains 2.2% as Q4 Earnings Beat Estimates
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Shares of Ares Capital Corporation (ARCC - Free Report) gained 2.2% following the release of its fourth-quarter and full-year 2022 results. Quarterly core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 56 cents. The bottom line reflected a rise of 8.6% from the prior-year quarter.
Results were aided by an increase in total investment income and lower expenses. The portfolio activity remained solid in the quarter.
GAAP net income was $174 million or 34 cents per share, down from $382 million or 83 cents per share in the prior-year quarter.
In 2022, core earnings per share of $2.02 beat the consensus estimate of $1.96 and were on par with the prior-year figure. GAAP net income was $600 million or $1.21 per share, down from $1.57 billion or $3.51 per share in 2021.
Total Investment Income Increases, Expenses Decline
Total investment income in the reported quarter was $640 million, up 21% year over year. The rise was driven by an increase in dividend income, interest income from investments and other income. The top line also beat the Zacks Consensus Estimate of $577.7 million.
In 2022, total investment income increased 15.2% to $2.1 billion. The top line also outpaced the consensus estimate of $2.03 billion.
Total expenses were $273 million, down 2.2% year over year.
Portfolio Activities Solid
Gross commitments worth $2.52 billion were made in the fourth quarter to new and existing portfolio companies. This compares with $5.87 billion of gross commitments in the prior-year quarter.
In the reported quarter, the company exited $2.33 billion of commitments compared with $3.87 billion a year ago.
The fair value of Ares Capital’s portfolio investments was $21.8 billion as of Dec 31, 2022. The fair value of accruing debt and other income-producing securities was $19.49 billion.
Balance Sheet Strong
As of Dec 31, 2022, the company’s cash and cash equivalents totaled $303 million, down from $372 million as of Dec 31, 2021.
Ares Capital had $3.9 billion available for additional borrowings under the existing credit facilities as of Dec 31, 2022. Total outstanding debt was $12.21 billion.
As of Dec 31, 2022, total assets were $22.4 billion and stockholders’ equity was $9.6 billion.
Net asset value was $18.40 per share, down from $18.96 as of Dec 31, 2021.
Our Take
Driven by a rise in the demand for customized financing, growth in total investment income is expected to continue in the quarters ahead. An increase in investment commitments will likely keep supporting the company’s financials.
Ares Capital Corporation Price, Consensus and EPS Surprise
Hercules Capital, Inc. (HTGC - Free Report) is scheduled to announce quarterly numbers on Feb 16.
Over the past 30 days, the Zacks Consensus Estimate for Hercules Capital’s fourth-quarter earnings has been unchanged at 42 cents. The estimate indicates a rise of 20% from the prior-year quarter’s reported number.
FS KKR Capital Corp. (FSK - Free Report) is slated to announce quarterly numbers on Feb 27.
Over the past 30 days, the Zacks Consensus Estimate for FS KKR Capital’s quarterly earnings has been unchanged at 75 cents, implying a 15.4% rise from the prior-year reported number.
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Ares Capital (ARCC) Gains 2.2% as Q4 Earnings Beat Estimates
Shares of Ares Capital Corporation (ARCC - Free Report) gained 2.2% following the release of its fourth-quarter and full-year 2022 results. Quarterly core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 56 cents. The bottom line reflected a rise of 8.6% from the prior-year quarter.
Results were aided by an increase in total investment income and lower expenses. The portfolio activity remained solid in the quarter.
GAAP net income was $174 million or 34 cents per share, down from $382 million or 83 cents per share in the prior-year quarter.
In 2022, core earnings per share of $2.02 beat the consensus estimate of $1.96 and were on par with the prior-year figure. GAAP net income was $600 million or $1.21 per share, down from $1.57 billion or $3.51 per share in 2021.
Total Investment Income Increases, Expenses Decline
Total investment income in the reported quarter was $640 million, up 21% year over year. The rise was driven by an increase in dividend income, interest income from investments and other income. The top line also beat the Zacks Consensus Estimate of $577.7 million.
In 2022, total investment income increased 15.2% to $2.1 billion. The top line also outpaced the consensus estimate of $2.03 billion.
Total expenses were $273 million, down 2.2% year over year.
Portfolio Activities Solid
Gross commitments worth $2.52 billion were made in the fourth quarter to new and existing portfolio companies. This compares with $5.87 billion of gross commitments in the prior-year quarter.
In the reported quarter, the company exited $2.33 billion of commitments compared with $3.87 billion a year ago.
The fair value of Ares Capital’s portfolio investments was $21.8 billion as of Dec 31, 2022. The fair value of accruing debt and other income-producing securities was $19.49 billion.
Balance Sheet Strong
As of Dec 31, 2022, the company’s cash and cash equivalents totaled $303 million, down from $372 million as of Dec 31, 2021.
Ares Capital had $3.9 billion available for additional borrowings under the existing credit facilities as of Dec 31, 2022. Total outstanding debt was $12.21 billion.
As of Dec 31, 2022, total assets were $22.4 billion and stockholders’ equity was $9.6 billion.
Net asset value was $18.40 per share, down from $18.96 as of Dec 31, 2021.
Our Take
Driven by a rise in the demand for customized financing, growth in total investment income is expected to continue in the quarters ahead. An increase in investment commitments will likely keep supporting the company’s financials.
Ares Capital Corporation Price, Consensus and EPS Surprise
Ares Capital Corporation price-consensus-eps-surprise-chart | Ares Capital Corporation Quote
Currently, ARCC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Finance Stocks
Hercules Capital, Inc. (HTGC - Free Report) is scheduled to announce quarterly numbers on Feb 16.
Over the past 30 days, the Zacks Consensus Estimate for Hercules Capital’s fourth-quarter earnings has been unchanged at 42 cents. The estimate indicates a rise of 20% from the prior-year quarter’s reported number.
FS KKR Capital Corp. (FSK - Free Report) is slated to announce quarterly numbers on Feb 27.
Over the past 30 days, the Zacks Consensus Estimate for FS KKR Capital’s quarterly earnings has been unchanged at 75 cents, implying a 15.4% rise from the prior-year reported number.