Value
7.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 7.7 |
| P/S | 7.2 |
| Fwd P/E | 9.3 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.0x
- ▸PEG: 0.17
- ▸Attractively valued
ARCC · Why this verdict
Why Ares Capital (ARCC) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ares Capital offers strong margins and a 10.1% dividend at a forward P/E of 9.9x, but the price already sits 4.4% above the analyst target and revenue is declining, so adding is not compelling.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Ares Capital pays a 10.1% dividend yield with a dividend-safety score of 5.5, delivering income as the main return driver. Catalyst breakdown | The dividend is maintained at the current rate over the next 12 months. | ↑Improving |
| CounterDividend safety at 5.5/10 is only middling, and a credit downturn could force a cut. | ||
The stock shows strong margins of 28% and is attractively valued at a forward P/E of 9.9x with a PEG of 0.17. Valuation breakdown | Margins stay near 28% and earnings growth supports the multiple. | ↓Deteriorating |
| CounterThere is no competitive moat and the Piotroski F-Score component is only 4.4, so the margin strength may not be durable. | ||
Price is 4.4% above the $18.27 analyst target, so the stock has no remaining analyst upside and reward-to-risk is negative at -0.88. Warnings | Analyst targets rise above the current $19.11 price or the stock pulls back toward target. | ↓Deteriorating |
| CounterAnalyst ratings score a strong 8.37, and targets often lag price in a rising trend, so upside revisions could follow. | ||
Revenue is declining 2% while leverage carries a debt-to-equity penalty at 1.1, weakening the growth outlook. Growth breakdown | Revenue growth turns positive and debt-to-equity does not rise above 1.1. | ↓Deteriorating |
| CounterFor a lender, leverage is the business model and earnings growth scores a perfect 10, so declining revenue may be timing noise. | ||
Price shows a golden cross and is above all moving averages with RSI 60, but falling OBV signals volume distribution. Momentum breakdown | Momentum holds above 5.0 and OBV turns positive. | ↑Improving |
| CounterFalling volume with a flat 200-day slope suggests the breakout may lack conviction and could fail. | ||
Ares Capital pays a 10.1% dividend yield with a dividend-safety score of 5.5, delivering income as the main return driver.
↑ImprovingCatalyst breakdown
- Expectation
- The dividend is maintained at the current rate over the next 12 months.
CounterDividend safety at 5.5/10 is only middling, and a credit downturn could force a cut.
The stock shows strong margins of 28% and is attractively valued at a forward P/E of 9.9x with a PEG of 0.17.
↓DeterioratingValuation breakdown
- Expectation
- Margins stay near 28% and earnings growth supports the multiple.
CounterThere is no competitive moat and the Piotroski F-Score component is only 4.4, so the margin strength may not be durable.
Price is 4.4% above the $18.27 analyst target, so the stock has no remaining analyst upside and reward-to-risk is negative at -0.88.
↓DeterioratingWarnings
- Expectation
- Analyst targets rise above the current $19.11 price or the stock pulls back toward target.
CounterAnalyst ratings score a strong 8.37, and targets often lag price in a rising trend, so upside revisions could follow.
Revenue is declining 2% while leverage carries a debt-to-equity penalty at 1.1, weakening the growth outlook.
↓DeterioratingGrowth breakdown
- Expectation
- Revenue growth turns positive and debt-to-equity does not rise above 1.1.
CounterFor a lender, leverage is the business model and earnings growth scores a perfect 10, so declining revenue may be timing noise.
Price shows a golden cross and is above all moving averages with RSI 60, but falling OBV signals volume distribution.
↑ImprovingMomentum breakdown
- Expectation
- Momentum holds above 5.0 and OBV turns positive.
CounterFalling volume with a flat 200-day slope suggests the breakout may lack conviction and could fail.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.1 |
| ROA | 3.2 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 4.2 |
| Moat | 4.6 |
| Piotroski F | 4.4 |
- ▸Strong margins: 28%
- ▸No competitive moat
Growth
6.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.9 |
| EPS growth | 10.0 |
- ▸Declining revenue: -2%
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 8.3 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 2.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.2 |
| Analyst rating | 8.4 |
| Price target | 6.5 |
Insider
6.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.9 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $46,150 (0.000% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 3.8 |
| growth rank | 3.5 |
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.3 |
| support resistance | 3.9 |
| 52w position | 9.2 |
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 1.5 |
| volatility | 7.7 |
| put call | 0.0 |
| implied vol | 3.7 |
| max pain risk | 3.0 |
| debt equity | 4.8 |
| news risk | 6.0 |
- ▸Elevated put/call: 5.00
- ▸Above max pain $15
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 1.7 |
| dividend safety | 4.5 |
| news activity | 8.0 |
- ▸Earnings concerns: 0B/2M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:92d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.8=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.78
Upside
-3.9%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:6.5>=5.5. Top dim: Value at 7.6; weakest: Peer rank at 3.5. No conviction either direction.
The strongest dimensions are Value at 7.6, Sentiment at 7.1, and Momentum at 6.5; the weakest are Peer rank at 3.5, Risk (lower is worse) at 4.2, and Catalyst at 4.3. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.78 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Dividend Income
Trip ifDividend yield falls below 8% because of a dividend cut of more than 20%.
- P2Strong Margins Cheap Multiple
Trip ifNet margin falls below 20% from current 28%.
- P3Analyst Target Already Reached
Trip ifPrice rises more than 10% above the analyst target of $18.27.
- P4Declining Revenue Leverage
Trip ifRevenue declines more than 5% year over year or debt-to-equity exceeds 1.5.
- P5Breakout Momentum Fading Volume
Trip ifMomentum score falls below 4.0 from current 5.2.