Ares Capital Shares Decline 2.7% as Q1 Earnings Miss Estimates

Shares of Ares Capital Corporation ARCC lost 2.7% in Tuesday’s trading session on lower-than-expected results. Its first-quarter 2025 core earnings of 50 cents per share missed the Zacks Consensus Estimate of 54 cents. The bottom line also reflected a decline of 15.3% from the prior-year quarter.The results were primarily affected by lower portfolio exits and gross commitments. Yet, an improvement in the total investment income, a fall in expenses and the company’s robust activities offered some support.GAAP net income was $241 million or 36 cents per share, down from $449 million or 76 cents per share in the prior-year quarter.ARCC’s Total Investment Income Improves, Expenses DipTotal investment income was $732 million, up 4.4% year over year. The rise was largely driven by an increase in interest income from investments, capital structuring service fees and other income. The top line, however, lagged the Zacks Consensus Estimate of $770 million.Total quarterly expenses were $360 million, down 2.4%. The decrease was mainly due to negative capital gains incentive fees.Portfolio Activities Robust for ARCCIn the first quarter, the company made gross commitments worth $3.45 billion to new and existing portfolio companies compared with $3.55 billion in the prior-year quarter.Further, the company exited $2.86 billion of commitments compared with $3.41 billion a year ago.The fair value of Ares Capital’s portfolio investments was $27.1 billion as of March 31, 2025.The fair value of accruing debt and other income-producing securities was $23.9 billion.Ares Capital’s Balance Sheet StrongAs of March 31, 2025, the company’s cash and cash equivalents totaled $647 million, up from $635 million as of Dec. 31, 2024.Ares Capital had $5.4 billion available for additional borrowings under the existing credit facilities as of March 31, 2025. Total outstanding debt was $13.9 billion.As of March 31, 2025, total assets were $28.3 billion and stockholders’ equity was $13.7 billion.Net asset value was $19.82 per share, down from $19.89 as of March 31, 2025.Our Take on ARCCDriven by the rise in the demand for customized financing, growth in total investment income is expected to continue. Increased investment commitments will likely keep supporting ARCC’s financials. However, its expansion strategies might 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 QuoteCurrently, 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 of ARCC’s PeersHercules Capital, Inc. HTGC is slated to report first-quarter 2025 numbers on May 1. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Over the past month, the Zacks Consensus Estimate for Hercules Capital’s quarterly earnings has remained unchanged at 46 cents. This indicates an 8% decline from the prior-year quarter.Main Street Capital MAIN is scheduled to announce first-quarter 2025 results on May 8.Over the past 30 days, the Zacks Consensus Estimate for Main Street Capital’s quarterly earnings remained unchanged at $1.00. This implies a 4.8% fall from the prior-year quarter.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ares Capital Corporation (ARCC): Free Stock Analysis Report Hercules Capital, Inc. (HTGC): Free Stock Analysis Report Main Street Capital Corporation (MAIN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks