ARCC - Ares Capital: Another Strong Quarter Despite A Decline In Net Income

2024-06-05 10:06:55 ET

Summary

• Ares Capital delivered a strong 4.1% total NAV return and a rise in core earnings in the latest quarterly results.
• Ares Capital trades at a 9.5% dividend yield and has a core earnings yield of 12.5%.
• The portfolio sector allocation is focused on software and healthcare, with a lower first-lien portfolio and a focus on larger companies.
• Net income fell during the quarter, but we expect it to partly bounce back next quarter as the new equity capital is put to work and leveraged.
• The stock's valuation is rich on an absolute basis but modest relative to the sector.

In this article, we discuss the latest quarterly results from the Business Development Company ("BDC") Ares Capital ( ARCC ). The company delivered a strong 4.1% total NAV return over the quarter, once again beating the average BDC in our coverage....

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