Upcoming AWS Coverage on Main Street Capital Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 10, 2017 / Active Wall St. announces its post-earnings coverage on Ares Capital Corp. (NASDAQ: ARCC). The Company reported its fourth quarter and fiscal 2016 financial results on February 22, 2017. The private equity firm outperformed top- and bottom-line expectations. Register with us now for your free membership at:

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One of Ares Capital's competitors within the Diversified Investments space, Main Street Capital Corp. (NYSE: MAIN), reported on February 23, 2017, its financial results for Q4 and full year ended December 31, 2016. AWS will be initiating a research report on Main Street Capital in the coming days.

Today, AWS is promoting its earnings coverage on ARCC; touching on MAIN. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended December 31, 2016, Ares Capital recorded total investment income of $261 million, marginally below the total investment of $262 million in Q4 2015. The numbers surpassed analysts' consensus of $247.1 million.

For Q4 2016, Ares Capital reported GAAP net income of $75 million, or $0.24 per share (basic and diluted), compared to GAAP net income of $15 million, or $0.05 per share, for the year ago same period. The Company's Core EPS totaled $0.42 per share (basic and diluted) versus Core EPS of $0.40 for Q4 2015, also exceeding Wall Street's forecasts for earnings of $0.39 per share. Ares Capital's net investment income was $138 million, or $0.44 per share (basic and diluted), and net realized and unrealized losses of $63 million, or $0.20 per share (basic and diluted), for the reported quarter.

As of December 31, 2016, Ares Capital's total assets were $9.2 billion, stockholders' equity was $5.2 billion and net asset value per share was $16.45.

Investment Portfolio

In Q4 2016, Ares Capital made $1.16 billion in new commitments, including commitments to 10 new portfolio companies, 12 existing portfolio companies, and 2 additional portfolio companies through the Senior Direct Lending Program, LLC (SDLP), under which Ares Capital co-invests with Varagon Capital Partners and its clients, to fund first lien senior secured loans. The Company stated that all the new commitments were sponsored transactions.

As of December 31, 2016, 148 separate private equity sponsors were represented in Ares Capital's portfolio. Of the $1.16 billion in new commitments made during the reported quarter, 57% were in first lien senior secured loans, 33% were in second lien senior secured loans, 7% were in subordinated certificates of the SDLP and 3% were in other equity securities. Of these commitments, 97% were in floating rate debt securities, of which 93% contained interest rate floors and the remaining 7% were in the subordinated certificates of the SDLP to make co-investments with Varagon in floating rate first lien senior secured loans through the SDLP, all of which contained interest rate floors.

The fair value of Ares Capital's portfolio investments at December 31, 2016, was $8.8 billion, including $7.9 billion in accruing debt and other income producing securities. The total portfolio investments at fair value were comprised of approximately 23% of first lien senior secured loans, 34% of second lien senior secured loans, 3% of subordinated certificates of the SDLP, 22% of subordinated certificates of the SSLP, 8% of senior subordinated debt securities, 3% of preferred equity securities and 7% of other equity securities.

As of December 31, 2016, Ares Capital's weighted average yield of debt and other income producing securities in the portfolio at fair value and amortized cost was 9.4% and 9.3%, respectively, the weighted average yield on total investments in the portfolio at fair value and amortized cost was 8.5% and 8.3%, respectively, and 81% of the total investments at fair value were in floating rate securities.

"We finished 2016 with strong fourth quarter earnings in another very good year for Ares Capital where we increased our core earnings per share by 5% and GAAP earnings per share by 26%," said Kipp deVeer, Ares Capital's Chief Executive Officer.

Portfolio Quality

As of December 31, 2016 and 2015, the weighted average grade of the investments in Ares Capital's portfolio at fair value was 3.1 and 3.0, respectively, and loans on non-accrual status represented 2.9% and 2.6%, respectively, of total investments at amortized cost (or 0.8% and 1.7%, respectively, at fair value).

Liquidity and Capital Resources

As of December 31, 2016, Ares Capital had $223 million in cash and cash equivalents and $4.0 billion in total aggregate principal amount of debt outstanding ($3.9 billion at carrying value). Subject to leverage, borrowing base and other restrictions, Ares Capital had approximately $1.4 billion available for additional borrowings under its existing credit facilities and Small Business Administration-guaranteed debentures as of December 31, 2016.

Dividend

Ares Capital announced that its Board of Directors has declared a Q1 2017 dividend of $0.38 per share, payable on March 31, 2017, to stockholders of record as of March 15, 2017.

Stock Performance

On Thursday, March 09, 2017, the stock closed the trading session at $17.61, slightly slipping 0.56% from its previous closing price of $17.71. A total volume of 2.84 million shares have exchanged hands. Ares Capital's stock price rallied 10.46% in the last three months, 12.55% in the past six months, and 37.79% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 6.79%. The stock is trading at a PE ratio of 11.67 and has a dividend yield of 8.63%.

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SOURCE: Active Wall Street