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What's in the Cards for Ares Capital (ARCC) in Q3 Earnings?

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Ares Capital Corporation (ARCC - Free Report) is scheduled to announce third-quarter 2019 results on Oct 30, before the market opens. Its revenues and earnings in the quarter are expected to improve on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an increase in total investment income and healthy portfolio activity, partly offset by higher expenses.

It has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 11.4%.

Ares Capital Corporation Price and EPS Surprise
 

Ares Capital Corporation Price and EPS Surprise

Ares Capital Corporation price-eps-surprise | Ares Capital Corporation Quote

However, activities of Ares Capital in the third quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 46 cents for the to-be-reported quarter has been unchanged over the past 30 days. Nonetheless, the figure indicates 2.2% rise from the year-ago quarter’s reported number.

The consensus estimate for sales of $370.3 million suggests 8.3% growth on a year-over-year basis.

Key Estimates for Q3

The Zacks Consensus Estimate for interest income from investments (constituting more than 75% of the company’s total investment income) is pegged at $295 million, indicating a marginal decline from the prior quarter’s reported figure.

The consensus estimate for capital structuring service fees is pegged at $29.57 million, suggesting a 22.2% decline sequentially. Moreover, the Zacks Consensus Estimate for dividend income of $33.77 million indicates a decline of 11.1% on a sequential basis.

The consensus estimate for other income is pegged at $9.84 million, suggesting a 1.6% fall from the prior quarter’s reported figure.

Ares Capital has been witnessing higher expenses over the past several quarters. As it continues to invest in venture growth stage companies, operating expenses are likely to have remained elevated in the third quarter.

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 around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.

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.

Stocks That Warrant a Look

Here are some finance stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat in their upcoming releases.

Santander Consumer USA Holdings Inc (SC - Free Report) is slated to release results on Oct 30. It presently has an Earnings ESP of +1.01% and a Zacks Rank #3.

Cullen/Frost Bankers, Inc (CFR - Free Report) is slated to release results on Oct 31. It currently has an Earnings ESP of +0.07% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Banco Macro S.A. (BMA - Free Report) is expected to release results on Nov 26. It has an Earnings ESP of +12.20% and a Zacks Rank #3 at present.

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