Ares Capital Corporation: 2Q Earnings: Credit Normalization Continues, though Investment Opportunity Set is Growing

Research evidence excerpt

Ares Capital Corporation: 2Q Earnings: Credit Normalization Continues, though Investment Opportunity Set is Growing

Global Research

29 July 2026ab

Ares Capital Corporation Equities

United States2Q Earnings: Credit Normalization Continues,

though Investment Opportunity Set is Growing Diversified Financial

12-month rating Neutral *

12m price target US$19.00Our Take: Credit Continues to Normalize, Upper Middle Market Opportunities

Emerge

With ARCC reporting, BDC earnings season is officially underway, with investor focus Price (29 Jul 2026) US$18.71

centered on earnings trajectory, the pace of direct lending originations, and portfolio RIC: ARCC.O BBG: ARCC US

credit trends. While credit metrics continued to normalize during the quarter,

management emphasized that underlying portfolio company performance remains Trading data and key metrics

healthy (portfolio company EBITDA growth was 8% Y/Y in 2Q, slightly lower from the 52-wk range US$22.69-17.45

9% rate in 1Q). NAV declined 1.9% Q/Q to $19.35 per share, though management Market cap. US$13.4b

attributed the majority of unrealized depreciation to spread widening and market Shares o/s 718m (COM)

valuation marks rather than company-specific credit deterioration. Free float 96%

Avg. daily volume ('000) 5,127

Against a cautious lending backdrop, management noted transaction activity Avg. daily value (m) US$96

accelerated throughout the quarter, with June representing one of the strongest months Common s/h equity (12/26E) US$13.9b

for deal review activity in recent periods. ARCC sees the most attractive risk-adjusted P/BV (12/26E) 1.0x

opportunities in the upper middle market, where competitive dynamics are more Tier 1 ratio -

favorable. While portfolio growth may remain somewhat constrained given ARCC