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Investing.com -- Shares of Ares Management (NYSE: NYSE:ARES) dropped 3.5% today following the company’s reported decline in earnings per share (EPS) for the fourth quarter. The investment firm posted a Q4 EPS of $1.23, which was below the analyst consensus estimate of $1.32 and also a decrease from the $0.72 per share reported in the same quarter last year.
The EPS shortfall is attributed to a number of factors outlined in the company’s earnings report. Despite a year of record investing and stable credit performance, Ares Management’s net investment income (NII) fell short of expectations. The company also reported a corporate tax rate higher than anticipated, which contributed to the earnings miss.
Analyst Bill Katz from TD Cowen commented on the results, stating, "Ex ~$0.01 debt charge, $1.24 ’operating R/I lagged us by $0.05 and consensus by $0.06. Relative to us, the ’miss’ is below the line, notably in NII and corporate tax rate; however, big capital raise Q, FRE margin beat, underlying performance trends generally constructive while GCP now slated to close in 1Q. Expect the stock to trade mixed pending 10 AM CC."
Despite the EPS miss, Ares Management’s fourth quarter showed some positive aspects, including a total of approximately $3.8 billion in new investment commitments and exits of commitments amounting to roughly $2.7 billion. The company’s portfolio investments at fair value increased to $26.72 billion, up from $22.874 billion at the end of the previous year.
Furthermore, the company’s liquidity and capital resources remain robust, with $635 million in cash and cash equivalents and $13.8 billion in total aggregate principal amount of debt outstanding as of December 31, 2024. Ares Capital also made amendments to its revolving funding facilities, which improved its financial flexibility.
Ares Capital’s board of directors declared a first-quarter 2025 dividend of $0.48 per share, payable on March 31, 2025, to stockholders of record as of March 14, 2025. This announcement reflects the company’s 15 consecutive years of stable or growing regular dividends and an increase in book value for shareholders.
Looking ahead, Ares Management appears well-positioned for an active investing market in 2025, with expectations of growth in acquisition finance and capital opportunities. However, today’s stock movement indicates that investors are weighing the EPS miss against the company’s strong fundamentals and future prospects.
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