A month has gone by since the last earnings report for Ares Capital (ARCC Quick QuoteARCC - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ares Capital due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Ares Capital Corporation before we dive into how investors and analysts have reacted as of late.

Ares Capital Q1 Earnings Lag Despite Strong Portfolio Activity

Ares Capital’s first-quarter 2026 core earnings of 47 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line fell 6% from the prior-year quarter.

The results were primarily hurt by lower transaction volumes and reduced capital structuring service fees, resulting from capital markets volatility, geopolitical uncertainty and retail outflows. However, higher interest income from investments, marginally lower expenses and robust portfolio activities provided support.

GAAP net income was $92 million or 13 cents per share, plummeting from $241 million or 36 cents per share in the prior-year quarter. The decline was largely led by net unrealized losses due to spread widening in private credit markets.

Total Investment Income Improves, Expenses Fall Marginally

Total investment income was $763 million, up 4.2% year over year. This was driven by higher interest income from investments, dividend income and other income, partly offset by lower capital structuring service fees. The top line lagged the Zacks Consensus Estimate of $769 million.

Total expenses were $359 million, down marginally from the prior-year quarter.

Portfolio Activities Robust

In the first quarter, the company made gross commitments worth $3.25 billion to new and existing portfolio companies, down from $3.45 billion in the prior-year quarter.

The company exited $3.18 billion of investment commitments in the reported quarter compared with $2.86 billion a year ago.

The fair value of Ares Capital’s portfolio investments was $29.5 billion as of March 31, 2026, almost stable compared with the Dec. 31, 2025, value. Despite the concerns surrounding artificial intelligence, the company’s portfolio values were not materially impacted in the quarter because an independent AI risk assessment by a global consulting firm found that almost 85% of Ares Capital’s software portfolio is low-risk due to system-of-record positioning and high switching costs.

The fair value of accruing debt and other income-producing securities was $26.5 billion as of March 31, 2026.

Balance Sheet Strong

As of March 31, 2026, the company’s cash and cash equivalents totaled $505 million, down from $638 million as of Dec. 31, 2025.

Ares Capital had $5.5 billion available for additional borrowings under the existing credit facilities as of March 31, 2026. Total outstanding debt was $15.9 billion.

As of March 31, 2026, total assets were $30.7 billion and stockholders’ equity was $14.1 billion.

Net asset value was $19.59 per share, down from $19.94 as of Dec. 31, 2025.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Ares Capital has a poor Growth Score of F, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ares Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.