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Ares Capital's NAV, Dividend, And Valuation Vs. 14 BDC Peers (Post Q4 2019 Earnings, Including Current Price Target)

Published Wed, 25 Mar 2020 15:34:03 -0400 on Seeking Alpha

Part 1 of this article compares ARCC’s recent quarterly change in NAV, quarterly and trailing twelve-month economic return, NII, and current valuation to fourteen BDC peers.
Other metrics analyzed include each company’s cumulative realized gain (loss) per share, NII per share, price to annualized NII ratio, and percentage of income attributable to capitalized PIK income.
As a direct result of the recent notable sector sell-off, many stocks (including ARCC) are now attractively-very attractively priced.
I also provide a list of the other BDC stocks I currently believe are undervalued (a buy recommendation), overvalued (a sell recommendation), and appropriately valued (a hold recommendation).
While I am projecting at least a modest increase in credit risk (and non-accruals) for all BDC stocks as 2020 progresses, current valuations have nearly priced in a “worst-case” scenario.
Focus of Article:
The focus of PART 1 of this article is to analyze Ares Capital Corp.'s (Nasdaq: ARCC) recent results and compare a handful of the company's metrics to fourteen business development company ("BDC") peers. This analysis will show past and current data with supporting documentation within two detailed tables. Table 1 will compare ARCC's recent net asset value ("NAV") economic return, net investment income ("NII"), stock price to annualized NII ratio, and percentage of total investment income attributable to capitalized payment-in-kind ("PIK") income to the fourteen BDC peers. Table 1 will also provide a premium (discount) to NAV analysis using stock prices as of 3/20/2020. Table 2 will compare ARCC's investment portfolio (including several additional metrics) as of 9/30/2019 and 12/31/2019 to the fourteen BDC peers.
I am writing this two-part article due to the continued requests that such an analysis be specifically performed on ARCC and some of the company's BDC peers at periodic intervals. These BDC peers include Apollo Investment Corp. (OTC:AINV), FS KKR... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
PROSPECT CAPITAL 6.71   16.8 0.40 0.72 10.76
APOLLO INVESTMENT 16.78   14.2 1.18 1.80 10.73
TCP CAPITAL 13.75   29.3 0.47 1.44 10.48
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
PENNANTPARK FLOATING RATE CAPITAL 11.68   30.0 0.39 1.14 9.81
NEWTEK BUSINESS SERVICES 22.91   0.0 0.00 2.32 8.09
SOLAR CAPITAL 20.87   12.4 1.69 1.64 7.93
OAKTREE STRATEGIC INCOME 8.10   19.8 0.41 0.62 7.51
GOLUB CAPITAL BDC 18.55   15.7 1.18 1.28 6.89
GLADSTONE INVESTMENT 12.34   7.4 1.67 0.82 6.73
MAIN STREET CAPITAL 43.18   16.8 2.57 2.46 5.69
BLACKROCK 434.75   16.5 26.34 13.20 3.08