Pre-Market Activity Shows Heavy Volume And Movement For Ares Capital Corporation (ARCC)

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 $23.5 million.
  • ARCC traded 442,850 shares today in the pre-market hours as of 8:32 AM, representing 33.3% 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 8.3%. ARCC has a PE ratio of 8.8. Currently there are 8 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 1.5 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 up 4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ares Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, notable return on equity, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 29.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for ARES CAPITAL CORP is currently very high, coming in at 70.76%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 57.04% significantly outperformed against the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, ARES CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income increased by 3.1% when compared to the same quarter one year prior, going from $136.56 million to $140.80 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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