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Ares Capital Corporation (ARCC) Trading With Heavy Volume Before Market Open

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Ares Capital Corporation ( ARCC) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ares Capital Corporation as such a stock due to the following factors:

  • ARCC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.8 million.
  • ARCC traded 337,131 shares today in the pre-market hours as of 7:57 AM, representing 11.9% of its average daily volume.

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More details on ARCC:

Ares Capital Corporation specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. The stock currently has a dividend yield of 8.8%. ARCC has a PE ratio of 9.1. Currently there are 7 analysts that rate Ares Capital Corporation a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Ares Capital Corporation has been 2.7 million shares per day over the past 30 days. Ares has a market cap of $5.1 billion and is part of the financial sector and financial services industry. Shares are down 2.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ares Capital Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 22.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 45.6% when compared to the same quarter one year prior, rising from $80.34 million to $116.99 million.
  • The gross profit margin for ARES CAPITAL CORP is currently very high, coming in at 71.00%. Regardless of ARCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARCC's net profit margin of 48.80% significantly outperformed against the industry.
  • In its most recent trading session, ARCC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, ARES CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.

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