BDCX - Ares Capital's NAV Valuation And Dividend Vs. 13 BDC Peers - Part 1 (Includes Recommendations As Of 5/27/2024)
2024-05-30 11:54:35 ET
Summary
- Part 1 of this article compares ARCC’s recent quarterly change in NAV, quarterly and trailing 12-month economic return, NII, and current valuation to 13 BDC peers.
- Part 1 also performs a comparative analysis between each company’s investment portfolio as of 12/31/2023 and 3/31/2024. This includes an updated percentage of investments on non-accrual status.
- I also provide a list of the other BDC stocks I currently believe are undervalued (a buy recommendation), overvalued (a sell recommendation), and appropriately valued (a hold recommendation).
- Othermetrics analyzed include each company’s cumulative realized gain (loss) pershare, NII per share, price to annualized NII ratio, and percentage of incomeattributable to capitalized PIK income.
- Currently,the 14-coveredBDC peers have a range of valuations (7 overvalued, 6 appropriatelyvalued, 1undervalued). I believe ARCC iscurrently appropriately valued.
Focus of Article
The focus of PART 1 of this article is to analyze Ares Capital Corp.’s ( ARCC ) recent results and compare a handful of the company’s metrics to 13 business development company (“BDC”) peers. This analysis will show past and current data with supporting documentation within two detailed tables. Table 1 will compare ARCC’s recent net asset value (“NAV”) economic return (loss), net investment income (“NII”), stock price to annualized NII ratio, and percentage of total investment income attributable to capitalized payment-in-kind (“PIK”)/deferred income to the 13 BDC peers. Table 1 will also provide a premium (discount) to estimated CURRENT NAV analysis using stock prices as of 5/27/2024. Table 2 will compare ARCC’s investment portfolio (including several additional metrics) as of 12/31/2023 and 3/31/2024 to the 13 BDC peers.
I am writing this two-part article due to the continued requests that such an analysis be specifically performed on ARCC and some of the company’s BDC peers at periodic intervals. These BDC peers include Capital Southwest Corp. ( CSWC ), FS KKR Capital Corp. ( FSK ), Gladstone Investment Corp. ( GAIN ), Golub Capital BDC Inc. ( GBDC ), Main Street Capital Corp. ( MAIN ), MidCap Financial Investment Corp. ( MFIC ), Oaktree Specialty Lending Corp. ( OCSL ), Blue Owl Capital Corp. ( OBDC ), PennantPark Floating Rate Capital Ltd. ( PFLT ), SLR Investment Corp. ( SLRC ), BlackRock ( BLK ) TCP Capital Corp. ( TCPC ), TriplePoint Venture Growth BDC Corp. ( TPVG ), and Sixth Street Specialty Lending Corp. ( TSLX )....
Ares Capital's NAV, Valuation, And Dividend Vs. 13 BDC Peers - Part 1 (Includes Recommendations As Of 5/27/2024)