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Ares Capital Corporation (ARCC)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$47.00 - $125.46$72.00
Multi-Stage$34.62 - $37.69$36.13
Blended Fair Value$54.06
Current Price$20.41
Upside164.89%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS10.42%9.40%1.671.511.331.010.991.010.960.940.700.71
YoY Growth--10.48%13.05%31.41%2.21%-2.16%5.79%2.18%34.59%-2.05%4.96%
Dividend Yield--7.52%7.40%7.30%4.84%5.31%9.42%5.48%5.92%4.01%4.80%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,363.00
(-) Cash Dividends Paid (M)1,248.00
(=) Cash Retained (M)115.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)272.60170.38102.23
Cash Retained (M)115.00115.00115.00
(-) Cash Required (M)-272.60-170.38-102.23
(=) Excess Retained (M)-157.60-55.3812.78
(/) Shares Outstanding (M)683.75683.75683.75
(=) Excess Retained per Share-0.23-0.080.02
LTM Dividend per Share1.831.831.83
(+) Excess Retained per Share-0.23-0.080.02
(=) Adjusted Dividend1.591.741.84
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$47.00$72.00$125.46
Upside / Downside130.26%252.77%514.68%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,363.001,451.601,545.951,646.441,753.451,867.431,923.45
Payout Ratio91.56%91.25%90.94%90.63%90.31%90.00%92.50%
Projected Dividends (M)1,248.001,324.581,405.851,492.081,583.591,680.691,779.19

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)1,202.921,214.321,225.72
Year 2 PV (M)1,159.461,181.541,203.83
Year 3 PV (M)1,117.551,149.631,182.32
Year 4 PV (M)1,077.141,118.571,161.17
Year 5 PV (M)1,038.191,088.331,140.39
PV of Terminal Value (M)18,076.2318,949.3219,855.82
Equity Value (M)23,671.4824,701.7125,769.27
Shares Outstanding (M)683.75683.75683.75
Fair Value$34.62$36.13$37.69
Upside / Downside69.62%77.01%84.66%

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