Ares Capital Corporation Common Stock (ARCC)

FairStock Score: 72/100 — STEADY

Key Financials

Strengths

• Generates $689 million in annual free cash flow (5.1% yield on market cap)
• Attractive 10.1% dividend yield providing steady income returns
• FairStock composite score of 72/100 places it in the top tier across value, quality, and momentum factors

Concerns

• Revenue declining at 15.0% year-over-year signals potential demand weakness or market share loss
• Weak Piotroski F-Score of 1/9 suggests deteriorating financial quality across multiple dimensions
• Altman Z-Score of 0.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Ares Capital Corporation Common Stock is a mid-cap financial services company valued at $13.5 billion. The business generates $3.1 billion in annual revenue with a 9.6% net margin and $689 million in free cash flow. From a quality standpoint, Ares shows weak Piotroski F-Score of 1/9 signaling deteriorating fundamentals and distressed Altman Z-Score of 0.5 warrants caution. On valuation, the stock is attractively valued at 10.0x earnings, with offers a 35% margin of safety vs Graham Number of $29. Growth dynamics show revenue growing at -15.0% and profit growth of -17.9%. The 10.1% dividend yield adds an income component for patient holders. Our composite FairStock Score of 72/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $689 million in annual free cash flow (5.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Sluggish -15% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer