Ares Capital (ARCC) closed the most recent trading day at $20.52, moving -0.73% from the previous trading session. The stock fell short of the S&P 500, which registered a gain of 0.09% for the day. Meanwhile, the Dow experienced a drop of 0.1%, and the technology-dominated Nasdaq saw an increase of 0.16%. Analysts and investors alike will be keeping a close eye on the performance of Ares Capital in its upcoming earnings disclosure. The company is forecasted to report an EPS of $0.58, showcasing no movement ...

The most recent trading session ended with Ares Capital (ARCC) standing at $20.67, reflecting a +0.44% shift from the previouse trading day's closing. The stock exceeded the S&P 500, which registered a loss of 0.31% for the day. At the same time, the Dow added 0.67%, and the tech-heavy Nasdaq lost 1.09%.Shares of the private equity firm have depreciated by 3.61% over the course of the past month, underperforming the Finance sector's loss of 1.77% and the S&P 500's gain of 2.73%.Market participants will be c ...

FotoDuets/iStock via Getty Images Since the Fed started to increase the interest rates in 2022, the yield chasing investors have finally accessed a better option space to cherry pick assets at meaningful yields without assuming too much of a risk. Higher interest rates have imposed a downward pressure on the valuations of duration-heavy assets such as fixed income, preferred stocks and value equities, where the cash flows are relatively stable / fixed. For example, I remember that before the outbreak of ...

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Ares Capital (ARCC) .Ares Capital currently has an average broker ...

Sashkinw Market fear can be a trying time for some investors, but for enterprising investors, it can represent terrific buying opportunities. This is especially the case for dividend stocks that yield higher than the market average. For example, a 10% drop in price on a stock that’s already yielding results in an 8.8% yield, whereas the same percentage drop on the S&P 500 (SPY) would result in just a 13 basis point jump in yield, due to the current low 1.25% dividend yield of SPY. This brings me to the ...

aluxum While I have written a lot about high-yield investing covering many value plays, I have not elaborated so much on the portfolio construction, my investing objectives, and strategy. So, the goal of this article is to elaborate on 3 specific aspects that characterize my overall investment allocation process, where, hopefully, some of this will seem interesting and beneficial in the context of your investment approach: What are the objectives? What asset classes fulfill these objectives? What is the ke ...

Berkshire Hathaway's Ultra-High-Yield Dividend Stocks - Berkshire Hathaway's portfolio includes stocks with long histories of paying attractive dividends, with all top 12 holdings paying dividends [1] - Warren Buffett owns two ultra-high-yield dividend stocks through Berkshire's subsidiary, New England Asset Management (NEAM), which manages a separate portfolio [2] - NEAM's portfolio includes Ares Capital and Verizon Communications, both of which are ultra-high-yield dividend stocks [3] Ares Capital and Verizon as Income Investments - Ares Capital has a forward dividend yield of 8.9%, while Verizon's forward dividend yield is over 6.4% [4] - Ares Capital has maintained steady-to-growing dividends for 15 years, with the highest regular dividend per share growth among large BDCs over the last 10 years [4] - Verizon has increased its dividend payout for 17 consecutive years, the longest streak in the U.S. telecommunications industry [4] Business Strengths of Ares Capital and Verizon - Ares Capital is the largest player in the U.S. direct lending market, with a highly selective deal closing rate of around 5% [4] - Verizon is a leader in providing wireless and broadband services for businesses and consumers [4] Valuation of Ares Capital and Verizon - Ares Capital's forward price-to-earnings ratio is below 9.2, compared to 15.5 for the S&P 500 financial sector [5] - Verizon's shares trade at a little over 9 times forward earnings, compared to over 19.2 for the S&P 500 communication services sector [5] Risks for Ares Capital and Verizon - Ares Capital faces the risk of loan defaults, which could increase during a major U.S. economic downturn [6] - Verizon operates in a highly competitive telecom market and must invest heavily in new technologies like 5G networks [7]

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Core Viewpoint - Ares Capital (ARCC) has been gaining attention as a highly searched stock, with its recent performance showing a +2.1% return over the past month, compared to the S&P 500's +3.5% and the Zacks Financial - SBIC & Commercial Industry's +0.5% [1] Earnings Estimates - Ares Capital is expected to report earnings of $0.58 per share for the current quarter, unchanged from the previous year, with a consensus estimate change of +0.2% over the last 30 days [3] - For the current fiscal year, the consensus earnings estimate is $2.34, reflecting a -1.3% change from the prior year, with a +0.1% change in the last 30 days [3] - The next fiscal year's consensus estimate is $2.23, indicating a -4.9% change from the previous year, with a +0.5% change over the past month [3] Revenue Growth Forecast - The consensus sales estimate for the current quarter is $714.27 million, representing a year-over-year increase of +12.7% [5] - For the current fiscal year, the revenue estimate is $2.87 billion, indicating a +10% change, while the next fiscal year's estimate of $2.92 billion shows a +1.7% change [5] Last Reported Results and Surprise History - Ares Capital reported revenues of $701 million in the last quarter, a +13.4% year-over-year increase, with EPS of $0.59 compared to $0.56 a year ago [6] - The reported revenues were slightly below the Zacks Consensus Estimate of $701.4 million, resulting in a surprise of -0.06%, while the EPS surprise was 0% [6] - Over the last four quarters, Ares Capital surpassed consensus EPS estimates three times and revenue estimates two times [6] Valuation - Ares Capital's valuation is assessed through multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), which help determine if the stock is fairly valued, overvalued, or undervalued [7] - The Zacks Value Style Score indicates that Ares Capital is graded D, suggesting it is trading at a premium compared to its peers [9]

Core Insights - Ares Capital (NASDAQ:ARCC) reported a strong quarterly performance with a total NAV return of 4.1%, outperforming the average BDC in coverage [1] - The company offers a 9% dividend yield and a core earnings yield of 10.3%, trading at a 9% premium to book value, consistent with the sector average [1] - The portfolio is primarily allocated in software and healthcare sectors, with a focus on larger companies compared to traditional middle-market BDC borrowers [1] Financial Performance - Core net investment income decreased to $0.59 from $0.64 in the previous quarter [3] - The NAV reached a record high of $19.52, marking the fifth consecutive quarterly increase [6] - The company declared a stable dividend of $0.48, with a coverage ratio of 123% and an estimated spillover of $1.05 per share [5] Investment Dynamics - Fee income saw a significant decline in Q1, typical for the sector, but not as severe as the previous year [4] - The conversion of a $400 million convertible bond to common equity led to a 3.5% increase in shares, impacting net income [5] - New commitments have primarily been in first-lien loans, slightly increasing the first-lien allocation [9] Portfolio Quality - Non-accruals rose slightly to 0.7%, remaining below the sector average, while overall portfolio quality improved [11] - The weighted-average loan-to-value ratio in the portfolio is 43%, indicating a conservative approach [12] - Portfolio companies demonstrated EBITDA growth exceeding that of the S&P 500, with stable interest coverage [12] Valuation and Market Position - Ares Capital continues to generate above-sector total NAV returns, with consistent outperformance [13] - Although the stock appears rich on an absolute basis, it is trading less than 2% above the sector average, indicating a modest relative valuation [15] - The company is highly diversified with 490 companies in its portfolio, significantly above the median of around 130 [16]