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

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Ares Capital (ARCC - Free Report) closed at $19.22 in the latest trading session, marking a -1.59% move from the prior day. This change lagged the S&P 500's daily loss of 1.47%. Meanwhile, the Dow lost 1.14%, and the Nasdaq, a tech-heavy index, lost 1.57%.

Coming into today, shares of the private equity firm had gained 0.88% in the past month. In that same time, the Finance sector lost 0.32%, while the S&P 500 lost 1.43%.

Wall Street will be looking for positivity from Ares Capital as it approaches its next earnings report date. In that report, analysts expect Ares Capital to post earnings of $0.58 per share. This would mark year-over-year growth of 16%. Meanwhile, our latest consensus estimate is calling for revenue of $655.14 million, up 22% from the prior-year quarter.

ARCC's full-year Zacks Consensus Estimates are calling for earnings of $2.34 per share and revenue of $2.58 billion. These results would represent year-over-year changes of +15.84% and +23%, respectively.

Investors should also note any recent changes to analyst estimates for Ares Capital. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Ares Capital is currently a Zacks Rank #2 (Buy).

Investors should also note Ares Capital's current valuation metrics, including its Forward P/E ratio of 8.36. Its industry sports an average Forward P/E of 7.3, so we one might conclude that Ares Capital is trading at a premium comparatively.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 28, which puts it in the top 12% 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.

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