ARCC Should I Buy
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Ares Capital Corp (ARCC) is not a strong buy for a beginner investor with a long-term strategy at this time. While the company has a strong dividend history and stability, the recent financial performance shows declining revenue, net income, and EPS. The technical indicators are bearish, and the options data reflects a bearish sentiment. Additionally, the stock has a high probability of short-term declines. For a long-term investor, waiting for a more favorable entry point or improved financial trends may be prudent.
The technical indicators for ARCC are bearish. The MACD is below zero and negatively contracting, the RSI is neutral at 43.204, and the moving averages suggest a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading near its support level of 18.941, with resistance at 19.98.
Ares Capital has maintained a 10% dividend yield and increased dividends for 16 consecutive years.
The company reported core earnings of $0.50 per share in Q4 2025, exceeding its $0.48 quarterly dividend.
Ares Capital anticipates carrying forward $1.38 per share of excess taxable income for distribution in 2026 to support dividend stability.
Financial performance in Q4 2025 showed declines in revenue (-5.55% YoY), net income (-17.93% YoY), and EPS (-25.45% YoY).
The MACD and moving averages indicate a bearish trend.
Options data reflects bearish sentiment with high put-call ratios.
Analysts have lowered the price target from $23.50 to $22, citing a decline in forward earnings.
In Q4 2025, Ares Capital reported a revenue drop to $715 million (-5.55% YoY), net income drop to $293 million (-17.93% YoY), and EPS drop to $0.41 (-25.45% YoY). Gross margin also declined to 70.63 (-6.20% YoY).
Analyst Sean-Paul Adams from B. Riley maintains a Buy rating but lowered the price target from $23.50 to $22 due to a decline in the company's forward earnings profile.
