A month has gone by since the last earnings report for Ares Capital (ARCC). Shares have lost about 0.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ares Capital due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Ares Capital Corporation before we dive into how investors and analysts have reacted as of late.
Ares Capital Q3 Earnings Meet Estimates, Total Investment Income Rises
Ares Capital’s third-quarter 2025 core earnings of 50 cents per share met the Zacks Consensus Estimate. However, the bottom line reflected a decline of 13.8% from the prior-year quarter.
The results were primarily aided by higher total investment income. Also, the company’s robust portfolio activities offered some support. However, higher expenses acted as a spoilsport.
GAAP net income was $404 million or 57 cents per share compared with $394 million or 62 cents per share in the prior-year quarter.
Total Investment Income Increases, Expenses Rise
Total investment income was $782 million, up roughly 1% year over year. The rise was primarily driven by higher capital structuring service fees and other income. The top line beat the Zacks Consensus Estimate of $763.7 million.
Total quarterly expenses were $433 million, up 7.7% year over year. The rise was mainly due to higher interest and credit facility fees, and base management fee.
Portfolio Activities Robust
In the third quarter, the company made gross commitments worth $3.92 billion to new and existing portfolio companies, flat compared with the prior-year quarter.
The company exited the quarter with $2.63 billion of commitments compared with $2.60 billion a year ago.
The fair value of Ares Capital’s portfolio investments was $28.7 billion as of Sept. 30, 2025.
The fair value of accruing debt and other income-producing securities was $25.9 billion.
Balance Sheet Strong
As of Sept. 30, 2025, the company’s cash and cash equivalents totaled $1.04 billion, up from $635 million as of Dec. 31, 2024.
Ares Capital had $5.2 billion available for additional borrowings under the existing credit facilities as of Sept. 30, 2025. Total outstanding debt was $15.6 billion.
As of Sept. 30, 2025, total assets were $30.8 billion and stockholders’ equity was $16.5 billion.
Net asset value was $20.01 per share, up from $19.89 as of Dec. 31, 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Ares Capital has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Ares Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ares Capital Corporation (ARCC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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