MeritValue

ARES CAPITAL CORP

ARCCdata completeness 75%6 fiscal years on file

Data notes: no data for concept 'revenue'; no data for concept 'capex'; no data for concept 'incomeTaxExpense'; no data for concept 'pretaxIncome'

The thesis, from the filings

ARES CAPITAL CORP earns about 12% on equity, but has diluted owners by 57% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $22.56 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue—————
Net income$1.57B1$600M2$1.52B3$1.52B3$1.3B3
Operating cash flow−$2.46B4−$1.36B5$511M6−$2.13B6−$1.72B6
Capital expenditure—————
Free cash flow (derived)—————
Total debt$11B7$12.2B8$11.9B9$13.7B10$16B10
Cash & equivalents$372M11$303M12$535M13$635M14$638M14
Diluted shares446.0M518.0M575.0M624.0M699.0M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$204.84
your share of equity
Profit it earned you last year
$18.58
Free cash flow it threw off
—
Debt you’d be carrying
$228.77

10 shares is a claim on $204.84 of net worth that earned you $18.58 last year, against $228.77 of debt.

iii. Is this a good business?
Moat signal · return on equity
12% avg · 5y
FY21 18%FY22 6%FY23 14%FY24 11%FY25 9%

It earned an average 12% on equity over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+57% shares · 5y

Share count is up 57% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has risen 45% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
DCF · Growth Exit 5Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
Earnings Power Value
$22.56
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$1.52B
  • growthAssumed0.0%
Graham Number
$29.28
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001287750-24-000011 (NetIncomeLoss)
  2. 10-K · period ending 2022-12-31 · accession 0001287750-25-000007 (NetIncomeLoss)
  3. 10-K · period ending 2023-12-31 · accession 0001287750-26-000006 (NetIncomeLoss)
  4. 10-K · period ending 2021-12-31 · accession 0001287750-24-000011 (NetCashProvidedByUsedInOperatingActivities)
  5. 10-K · period ending 2022-12-31 · accession 0001287750-25-000007 (NetCashProvidedByUsedInOperatingActivities)
  6. 10-K · period ending 2023-12-31 · accession 0001287750-26-000006 (NetCashProvidedByUsedInOperatingActivities)
  7. 10-K · period ending 2021-12-31 · accession 0001287750-23-000010 (LongTermDebt)
  8. 10-K · period ending 2022-12-31 · accession 0001287750-24-000011 (LongTermDebt)
  9. 10-K · period ending 2023-12-31 · accession 0001287750-25-000007 (LongTermDebt)
  10. 10-K · period ending 2024-12-31 · accession 0001287750-26-000006 (LongTermDebt)
  11. 10-K · period ending 2021-12-31 · accession 0001287750-23-000010 (CashAndCashEquivalentsAtCarryingValue)
  12. 10-K · period ending 2022-12-31 · accession 0001287750-24-000011 (CashAndCashEquivalentsAtCarryingValue)
  13. 10-K · period ending 2023-12-31 · accession 0001287750-25-000007 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2024-12-31 · accession 0001287750-26-000006 (CashAndCashEquivalentsAtCarryingValue)