Ares Capital Corporation (ARCC) Stock Analysis

Research · Sep 3, 2026

[ARCC] Ares Capital Thesis 2026: Record Portfolio Deployed as BDC Delivers Consistent Double-Digit ROE

Ares Capital Corporation FY25 revenue $3.15B (+33%); op income $2.19B (+37%); NI $1.30B (-15% from FY24 elevated mark gains); EPS $1.86 (-24%). FCF $1.14B (-11%). Core EPS Q4 $0.50 / FY $2.01. Total new commitments 2025 reached $15.8B — new annual record. Portfolio at fair value ended Q4 at $29.5B, up from prior periods. Core EPS fully covered dividends and drove ROE in excess of 10% for both Q4 and full year. Rebound in transaction activity H2 2025 led to meaningful acceleration in new investment commitments. Specialized industry verticals (sports media, specialty healthcare, others) saw non-sponsored originations grow over 50%. Portfolio company performance: weighted average organic EBITDA growth over 3 times GDP; average portfolio leverage decreased; interest coverage ratio improved to 2.2 times. Credit quality stable; non-accruals in line; pretax net realized gains on investments >$100M FY25. Total debt $15.99B (+16%). FY26 framework: expect ~$0.10/share earnings headwind from decline in base rates; Q1 2026 dividend $0.48/share payable March 31; strong start with $1.4B+ commitments through January 29, 2026; backlog $2.2B (+17% vs prior period); confidence in maintaining dividend with spillover income cushion. Risks: base rate environment, credit cycle dynamics, competition (Apollo, Blackstone, KKR, Blue Owl, Golub, Antares, Audax), sponsor PE deal cycle, regulatory (BDC), spread compression.

Research · Aug 25, 2026

Software Lending Raises Loan Loss Reserves on AI-Affected Loans

SPMC's FY2027 Q1 net investment income stayed below its common distributions partly because it raised model loss reserves on AI-affected software loans.

Research · Aug 25, 2026

Business Development Company Securitization Costs Fall by up to 97 Basis Points

PennantPark (PNNT) and Ares Capital (ARCC) reset loan securitizations in July, cutting spreads 97 and 35 basis points, while unsecured note costs held near 7%.

Research · Jun 10, 2026

ARCC Stock: Why Private Credit Default Risk Just Doubled

UBS Mish projects private credit defaults at 14-15% in AI-disruption tail scenario versus current 4.5%. ARCC has structural absorbers but limited cushion.

Research · Apr 30, 2026

ARCC Q1: Core EPS Slips Below Dividend on MTM Noise

Ares Capital's Q1 2026 core EPS of $0.47 fell below its $0.48 dividend, triggering tape concerns about dividend sustainability. However, net investment income remained robust at $0.55 per share, and the core EPS miss is entirely driven by a $0.57-per-share mark-to-market loss on the portfolio, not operational deterioration. Non-accrual loans ticked up modestly to 2.1% of amortized cost, but management characterized the portfolio as healthy. The dividend is not at risk; the tape has conflated mark-to-market volatility with operational stress.

Research · Apr 23, 2026

Which Private Credit Lenders Face the Steepest Penalty Risk as SEC Scrutiny Climbs 28%?

The SEC's non-compliance notices to Blackstone and PIMCO signal a regulatory shift in the $1.7T private credit market that the tape hasn't priced into BDC yield spreads. Prospect Capital's $8.9B asset base, 127 portfolio companies, and history of prior SEC actions create 3x the compliance surface area of Main Street Capital's cleaner book. Short PSEC vs long MAIN targets 400bps of yield spread compression over six months as compliance costs surface and potential penalties force a dividend cut.