RgStudio
Ares Capital (NASDAQ:ARCC) is one of the market’s leading business development companies or BDC. It last traded at a market cap of $11.4B. With a forward core earnings multiple of 8.5x, it’s also ahead of its peers’ median of 7.8x, suggesting a relative premium. I urged investors to avoid the recession fears in my previous update, as ARCC bottomed out in late October.
Despite its market-leading scale, ARCC’s total return performance has disappointed over the past year, underperforming its peers represented in the VanEck BDC Income ETF (BIZD). Despite this, it’s still a respectable performance, as ARCC delivered a total return of nearly 19%.
With the Fed expected to have reached the peak of its rate hike regime, concerns are mounting about the company’s portfolio performance moving ahead. Investors should note that Ares Capital’s portfolio is primarily based on floating rates. Based on the company’s…
