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Ares Capital (ARCC) to Report Q3 Earnings: What's in Store?

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Ares Capital Corporation (ARCC - Free Report) is scheduled to announce third-quarter 2023 results on Oct 24, 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, ARCC’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by an improvement in total investment income. Also, the company’s portfolio activity was robust. However, an increase in expenses hurt the results to some extent.

Ares Capital has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in two and met in one of the trailing four quarters, the average beat being 1.8%.

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 ARCC’s third-quarter earnings is pegged at 58 cents, unchanged over the past seven days. The figure indicates a rise of 16% from the prior-year quarter’s reported number. Our estimate for earnings is 57 cents.

The consensus estimate for sales is pegged at $655.1 million, which suggests a 22% rise on a year-over-year basis. Our estimate for sales is $645.3 million, implying growth of 20.2%.

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 $487 million, indicating a 26.5% rise from the prior-year quarter’s actual. Our estimate for the same is $479.3 million, suggesting a year-over-year rise of 24.5%.

The Zacks Consensus Estimate for dividend income of $124 million indicates year-over-year growth of 15.9%. Our estimate for dividend income is $122.8 million, indicating growth of 14.7%.

The consensus estimate for other income is pegged at $13.5 million, suggesting a year-over-year rise of 4.1%. Our estimate for the same is $10.8 million.

The consensus estimate for capital structuring service fees is pegged at $27.5 million, suggesting a 14% year-over-year decline. Our estimate for the metric is $32.4 million.

Ares Capital has been witnessing higher expenses over the past several quarters. As the company has been investing in venture growth stage companies, operating costs are expected to have been elevated in the third quarter. Our estimate for total expenses of $326.2 million indicates a year-over-year rise of 38.8%.

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 a Zacks Rank #3 (Hold) or better.

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 #3.

Finance Stocks That Warrant a Look

A couple of finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time, are Prosperity Bancshares, Inc. (PB - Free Report) and First Citizens BancShares, Inc. (FCNCA - Free Report) .

The Earnings ESP for Prosperity Bancshares is +1.50% and it carries a Zacks Rank #3 at present. PB is slated to report third-quarter 2023 results on Oct 25.

First Citizens is scheduled to release earnings on Oct 26. FCNCA, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +3.85%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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