Muzinich & Co. Inc. has significantly increased its investment in Ares Capital Corporation (NASDAQ: ARCC) by acquiring an additional 247,800 shares during the second quarter of 2023. This move raised Muzinich’s total holdings in Ares Capital to 1,373,051 shares, representing a substantial increase of 22.0%. As a result, Ares Capital now constitutes approximately 13.1% of Muzinich’s overall portfolio, making it the firm’s largest investment. The value of Muzinich’s stake in Ares Capital is currently estimated at $30,152,000.
Several other institutional investors also adjusted their positions in Ares Capital recently. For instance, Elequin Capital LP initiated a new stake in the company during the first quarter, valued at $30,000, while CNB Bank and Harbor Asset Planning Inc. acquired stakes worth $36,000 and $38,000, respectively, in the second quarter. Additionally, Investment Management Corp VA ADV raised its position in Ares Capital by an impressive 193.9% during the first quarter, bringing its total holdings to 1,828 shares valued at approximately $41,000 after purchasing an extra 1,206 shares.
As of now, hedge funds and other institutional investors collectively own 27.38% of Ares Capital’s stock.
Analyst Ratings and Stock Performance
Ares Capital has drawn attention from various equities research analysts recently. The Royal Bank of Canada lowered its price target for Ares Capital shares from $24.00 to $23.00 while maintaining an “outperform” rating. Citigroup reaffirmed a “market outperform” rating, and Capital One Financial set a target price of $22.50. On July 30, B. Riley upgraded Ares Capital from a “neutral” rating to a “buy” rating, increasing their price target from $22.50 to $23.50. Conversely, UBS Group reduced its price objective from $22.50 to $21.00, assigning a “neutral” rating.
Currently, eight investment analysts have rated Ares Capital with a Buy label, while two analysts issued a Hold rating. Data from MarketBeat indicates that the stock holds a consensus rating of “Moderate Buy” with a price target set at $22.25.
On October 26, Ares Capital’s stock opened at $20.61. Over the past year, the stock has fluctuated between a low of $18.26 and a high of $23.84. Financial metrics reveal a quick ratio and current ratio of 1.14, alongside a debt-to-equity ratio of 1.01. The company’s market capitalization stands at $14.54 billion, with a price-to-earnings ratio of 10.31 and a beta of 0.68.
On October 28, Ares Capital reported its quarterly earnings, revealing earnings per share (EPS) of $0.50, aligning with analyst expectations. The firm’s net margin reached 45.16%, and its return on equity was reported at 10.20%. Revenue for the quarter totaled $658 million, slightly below analyst predictions of $766.48 million. Compared to the same period last year, revenue increased by 0.9%, while EPS decreased from $0.58.
Dividend Announcement and Company Overview
In addition to its financial results, Ares Capital recently declared a quarterly dividend of $0.48, which will be distributed to investors on December 30. Shareholders recorded on December 15 will be eligible for this dividend, which translates to an annualized payout of $1.92, yielding 9.3%. The company’s current payout ratio is approximately 93.66%.
Ares Capital Corporation is a business development company that focuses on a variety of financial transactions, including acquisitions, recapitalizations, and leveraged buyouts of middle-market companies. The company also provides growth capital and general refinancing, primarily targeting sectors such as manufacturing, business services, consumer products, healthcare, and information technology.
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