Value
7.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 7.2 |
| Fwd P/E | 9.2 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.4x
- ▸PEG: 0.24
- ▸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.
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VerdictHOLD
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
A confirmed price downtrend, a price that has moved above the take-profit target, unfavorable reward-to-risk geometry, and a concentration risk flagged in regulatory filings collectively argue for reducing exposure — the attractive valuation multiples alone are insufficient to offset these structural headwinds.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A high-severity concentration risk has been flagged in the regulatory filing's risk factors section — dependence on a single counterparty creates a tail risk that is not fully priced into valuation multiples and could crystallize rapidly if that relationship deteriorates. Risk breakdown | Portfolio diversification away from concentrated exposures should be visible in future regulatory filings within 12 months; the risk concentration declining to a medium or low severity rating would remove this overhang. | ↓Deteriorating |
| CounterConcentration flagged in a risk-factor disclosure is a standard regulatory requirement and does not necessarily mean the relationship is impaired; if the counterparty relationship is stable and well-managed, the disclosed risk may never materialize. | ||
The stock is trading above the take-profit resistance level, leaving negative upside to target and a reward-to-risk ratio in unfavorable territory — the price has already reached the exit point implied by the setup, and the geometric case for holding has deteriorated. Price targets | A new catalyst that pushes the resistance target meaningfully higher, or a price pullback that re-establishes a positive upside-to-downside ratio greater than 1.5-to-1, would be needed to restore the setup. | →Stable |
| CounterAn attractively valued forward multiple of 9.7x and a PEG of 0.53 suggest the underlying business may be worth more than the resistance target implies; if fundamentals improve, the target could be revised upward and the current price may look reasonable in retrospect. | ||
The 200-day moving average is declining at roughly 1.6% per month and the stock is below it — a confirmed downtrend, not merely a pullback within a rising trend — suggesting that the path of least resistance for the price remains lower absent a fundamental catalyst. Momentum breakdown | The 200-day moving average should flatten and then turn upward, with the stock reclaiming it, before the technical picture improves enough to support a constructive view. | ↑Improving |
| CounterOn-balance volume is rising, indicating that buyers are accumulating on dips even as price lags; this divergence between price weakness and volume accumulation can precede a recovery if the fundamental news flow improves. | ||
The company has not beaten earnings estimates in any of the last four quarters — delivering two misses and two in-line results — with an average surprise modestly negative, signaling that management's earnings power is at or below what the market already expects. Catalyst breakdown | A clean earnings beat with a positive surprise greater than 3% for at least 2 consecutive quarters would demonstrate that the trend of missing or meeting has reversed. | ↑Improving |
| CounterAn in-line result is not a miss, and the earnings margin compared to estimates is narrow; a modest improvement in underlying portfolio performance could shift the pattern toward beats without requiring a dramatic change in the business. | ||
A high-severity concentration risk has been flagged in the regulatory filing's risk factors section — dependence on a single counterparty creates a tail risk that is not fully priced into valuation multiples and could crystallize rapidly if that relationship deteriorates.
↓DeterioratingRisk breakdown
- Expectation
- Portfolio diversification away from concentrated exposures should be visible in future regulatory filings within 12 months; the risk concentration declining to a medium or low severity rating would remove this overhang.
CounterConcentration flagged in a risk-factor disclosure is a standard regulatory requirement and does not necessarily mean the relationship is impaired; if the counterparty relationship is stable and well-managed, the disclosed risk may never materialize.
The stock is trading above the take-profit resistance level, leaving negative upside to target and a reward-to-risk ratio in unfavorable territory — the price has already reached the exit point implied by the setup, and the geometric case for holding has deteriorated.
→StablePrice targets
- Expectation
- A new catalyst that pushes the resistance target meaningfully higher, or a price pullback that re-establishes a positive upside-to-downside ratio greater than 1.5-to-1, would be needed to restore the setup.
CounterAn attractively valued forward multiple of 9.7x and a PEG of 0.53 suggest the underlying business may be worth more than the resistance target implies; if fundamentals improve, the target could be revised upward and the current price may look reasonable in retrospect.
The 200-day moving average is declining at roughly 1.6% per month and the stock is below it — a confirmed downtrend, not merely a pullback within a rising trend — suggesting that the path of least resistance for the price remains lower absent a fundamental catalyst.
↑ImprovingMomentum breakdown
- Expectation
- The 200-day moving average should flatten and then turn upward, with the stock reclaiming it, before the technical picture improves enough to support a constructive view.
CounterOn-balance volume is rising, indicating that buyers are accumulating on dips even as price lags; this divergence between price weakness and volume accumulation can precede a recovery if the fundamental news flow improves.
The company has not beaten earnings estimates in any of the last four quarters — delivering two misses and two in-line results — with an average surprise modestly negative, signaling that management's earnings power is at or below what the market already expects.
↑ImprovingCatalyst breakdown
- Expectation
- A clean earnings beat with a positive surprise greater than 3% for at least 2 consecutive quarters would demonstrate that the trend of missing or meeting has reversed.
CounterAn in-line result is not a miss, and the earnings margin compared to estimates is narrow; a modest improvement in underlying portfolio performance could shift the pattern toward beats without requiring a dramatic change in the business.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.3 |
| ROA | 3.3 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.5 |
| FCF quality | 5.9 |
| Moat | 5.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 4.4 |
- ▸Strong margins: 31%
- ▸Earnings quality warning: 79% FCF/NI
- ▸No competitive moat
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 10.0 |
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 3.4 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.1 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 7.2 |
| Price target | 5.6 |
Insider
6.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.1 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 4.3 |
| growth rank | 5.3 |
Technical
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.0 |
| support resistance | 2.4 |
| 52w position | 9.3 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 1.6 |
| volatility | 9.8 |
| put call | 4.7 |
| implied vol | 0.8 |
| max pain risk | 3.0 |
| beta | 9.3 |
| debt equity | 4.7 |
- ▸High IV: 75%
- ▸Above max pain $10
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 2.1 |
| dividend safety | 3.5 |
| news activity | 5.0 |
- ▸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_HOLD|L3:NEWS_MOD_NO_UPSIDEPassed (6)
- MOMENTUM:6.2>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:54d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.9=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.95
Upside
-9.7%
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:6.2>=5.5. Top dim: Value at 7.7; weakest: Catalyst at 3.4. No conviction either direction.
The strongest dimensions are Value at 7.7, Growth at 6.7, and Sentiment at 6.5; the weakest are Catalyst at 3.4, Peer rank at 4.0, and Technical at 4.9. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.95 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price Above Target Unfavorable Geometry
Trip ifTake-profit target is revised above $21.00, restoring a reward-to-risk ratio greater than 1.5x at the current price.
- P2Confirmed Price Downtrend
Trip ifThe 200-day moving average turns positive (slope exceeds 0% per month) and price reclaims it for more than 4 consecutive weeks.
- P3Counterparty Concentration Risk
Trip ifDisclosed high-severity concentration items fall below 1 in the next annual 10-K filing.
- P4Earnings Below Expectations
Trip ifEPS surprise exceeds 3% for 2 consecutive quarters.