Ares Capital Corporation Common Stock (ARCC)

FairStock Score: 72/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look at Ares Capital as a lender to middle-market companies, not a glamorous compounder. The business has scale and sourcing relationships, a modest moat, but it operates in a competitive credit market where capital is abundant. FairStock's calculations as of the 2026-10-13 close show a P/E of 13.85, P/B of 0.96, ROE of 6.88%, ROCE of 4.94%, and a D/E of 1.14. That leverage is normal for a BDC but it magnifies credit risk. The Lynch category fits: FairStock calls it an ASSET PLAY because it trades at 0.96 times book. The Graham Number is $24.15, leaving a 23.15% margin of safety, and the dividend yield is 9.90%, a strong current return if it holds. But the filed results show deterioration. In fiscal Q2 2026, the quarter ended 2026-06-30, net income was $171.0M and diluted EPS was $0.24. That compares poorly with fiscal Q2 2025, when net income was $361.0M and diluted EPS was $0.52. Full-year fiscal 2025 net income was $1.3B and diluted EPS $1.86, down from $1.5B and $2.44 in fiscal 2024. Trailing free cash flow is negative $680.0M, a -5.1% FCF yield, and the Altman Z-Score of 0.51 signals financial fragility, even if BDC accounting distorts it. A Piotroski score of 6/9 is middling. So I see a statistically cheap asset play with a fat dividend, but earnings power is weakening and credit conditions matter more than book value. The price is not demanding, but the margin of safety rests on the loan book holding its value.

In plain English: Ares Capital lends money to middle-sized companies. Lately its profit has been falling, and it carries a lot of debt, but the shares trade a bit below the accounting value of its net assets and pay a high dividend. At the 2026-10-13 close of $18.56, the price looks modestly cheap compared with its net assets, though the business has real credit risk.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer