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ARCC's Q4 Earnings Meet, Stock Up on Higher Total Investment Income
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Key Takeaways
Ares Capital shares rose 2.3% as Q4 core EPS met estimates despite a 9.1% yearly decline.
Ares Capital Q4 total investment income increased 4.5% to $793M, helped by fees and interest.
Ares Capital made $5.83B in Q4 gross commitments and exited $4.75B, with a $29.5B portfolio.
Shares of Ares Capital Corporation (ARCC - Free Report) gained 2.3% following the announcement of fourth-quarter and full-year 2025 results. Quarterly core earnings of 50 cents per share met the Zacks Consensus Estimate. The bottom line fell 9.1% from the prior-year quarter.
The results primarily benefited from higher total investment income. The company’s robust portfolio activities offered some support. However, higher expenses were the undermining factor.
GAAP net income was $293 million or 41 cents per share, down from $357 million or 55 cents per share in the prior-year quarter.
For 2025, core earnings per share of $2.01 beat the consensus estimate by a penny but declined 13.7% year over year. GAAP net income was $1.3 billion or $1.86 per share, down from $1.52 billion or $2.44 per share in 2024.
ARCC’s Total Investment Income Increases, Expenses Rise
Quarterly total investment income was $793 million, up 4.5% year over year. This was driven by higher capital structuring service fees, interest income from investments and other income. The top line lagged the Zacks Consensus Estimate of $796 million.
For 2025, the total investment income rose 2.1% to $3.05 billion. The top line missed the Zacks Consensus Estimate of $3.06 billion.
Total quarterly expenses were $406 million, up 4.9%. The rise was mainly due to higher interest and credit facility fees and base management fees.
ARCC’s Robust Portfolio Activities
In the fourth quarter, the company made gross commitments worth $5.83 billion to new and existing portfolio companies, up from $3.75 billion in the prior-year quarter.
The company exited $4.75 billion of investment commitments in the reported quarter compared with $2.75 billion a year ago.
The fair value of Ares Capital’s portfolio investments was $29.5 billion as of Dec. 31, 2025. The fair value of accruing debt and other income-producing securities was $26.51 billion.
Strong Balance Sheet of Ares Capital
As of Dec. 31, 2025, the company’s cash and cash equivalents totaled $638 billion, up from $635 million as of Dec. 31, 2024.
Ares Capital had $5.5 billion available for additional borrowings under the existing credit facilities as of Dec. 31, 2025. Total outstanding debt was $16 billion.
As of Dec. 31, 2025, total assets were $31.24 billion and stockholders’ equity was $14.32 billion.
Net asset value was $19.94 per share, up from $19.89 as of Dec. 31, 2024.
Our Take on ARCC
Driven by the rise in the demand for customized financing and lower rates, growth in total investment income is expected in the near term. Increased investment commitments are likely to keep supporting ARCC’s financials. However, its expansion strategies may lead to a rise in costs in the near term. Regulatory constraints pose another major headwind.
Ares Capital Corporation Price, Consensus and EPS Surprise
Hercules Capital, Inc. (HTGC - Free Report) is slated to report fourth-quarter and full-year 2025 numbers on Feb. 12.
Over the past seven days, the Zacks Consensus Estimate for Hercules Capital’s quarterly earnings has been unchanged at 48 cents. The estimate indicates a 2% decline from the prior-year quarter.
Main Street Capital (MAIN - Free Report) is scheduled to announce fourth-quarter and full-year 2025 results on Feb. 26.
Over the past seven days, the Zacks Consensus Estimate for Main Street Capital’s quarterly earnings has been unchanged at $1.06. The estimate suggests a 3.9% rise from the prior-year quarter.
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ARCC's Q4 Earnings Meet, Stock Up on Higher Total Investment Income
Key Takeaways
Shares of Ares Capital Corporation (ARCC - Free Report) gained 2.3% following the announcement of fourth-quarter and full-year 2025 results. Quarterly core earnings of 50 cents per share met the Zacks Consensus Estimate. The bottom line fell 9.1% from the prior-year quarter.
The results primarily benefited from higher total investment income. The company’s robust portfolio activities offered some support. However, higher expenses were the undermining factor.
GAAP net income was $293 million or 41 cents per share, down from $357 million or 55 cents per share in the prior-year quarter.
For 2025, core earnings per share of $2.01 beat the consensus estimate by a penny but declined 13.7% year over year. GAAP net income was $1.3 billion or $1.86 per share, down from $1.52 billion or $2.44 per share in 2024.
ARCC’s Total Investment Income Increases, Expenses Rise
Quarterly total investment income was $793 million, up 4.5% year over year. This was driven by higher capital structuring service fees, interest income from investments and other income. The top line lagged the Zacks Consensus Estimate of $796 million.
For 2025, the total investment income rose 2.1% to $3.05 billion. The top line missed the Zacks Consensus Estimate of $3.06 billion.
Total quarterly expenses were $406 million, up 4.9%. The rise was mainly due to higher interest and credit facility fees and base management fees.
ARCC’s Robust Portfolio Activities
In the fourth quarter, the company made gross commitments worth $5.83 billion to new and existing portfolio companies, up from $3.75 billion in the prior-year quarter.
The company exited $4.75 billion of investment commitments in the reported quarter compared with $2.75 billion a year ago.
The fair value of Ares Capital’s portfolio investments was $29.5 billion as of Dec. 31, 2025. The fair value of accruing debt and other income-producing securities was $26.51 billion.
Strong Balance Sheet of Ares Capital
As of Dec. 31, 2025, the company’s cash and cash equivalents totaled $638 billion, up from $635 million as of Dec. 31, 2024.
Ares Capital had $5.5 billion available for additional borrowings under the existing credit facilities as of Dec. 31, 2025. Total outstanding debt was $16 billion.
As of Dec. 31, 2025, total assets were $31.24 billion and stockholders’ equity was $14.32 billion.
Net asset value was $19.94 per share, up from $19.89 as of Dec. 31, 2024.
Our Take on ARCC
Driven by the rise in the demand for customized financing and lower rates, growth in total investment income is expected in the near term. Increased investment commitments are likely to keep supporting ARCC’s financials. However, its expansion strategies may lead to a rise in costs in the near term. Regulatory constraints pose another major headwind.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations for ARCC’s Peers
Hercules Capital, Inc. (HTGC - Free Report) is slated to report fourth-quarter and full-year 2025 numbers on Feb. 12.
Over the past seven days, the Zacks Consensus Estimate for Hercules Capital’s quarterly earnings has been unchanged at 48 cents. The estimate indicates a 2% decline from the prior-year quarter.
Main Street Capital (MAIN - Free Report) is scheduled to announce fourth-quarter and full-year 2025 results on Feb. 26.
Over the past seven days, the Zacks Consensus Estimate for Main Street Capital’s quarterly earnings has been unchanged at $1.06. The estimate suggests a 3.9% rise from the prior-year quarter.