Ares Management’s SWOT analysis: alternative investment giant’s stock poised for growth

Ares Management Corporation (NYSE:ARES), a leading global alternative investment manager, has been making waves in the financial sector with its robust growth strategies and strong market position. According to InvestingPro data, the company has delivered impressive revenue growth of nearly 50% over the last twelve months, while maintaining a "GOOD" overall financial health score. As the company continues to expand its presence in key areas such as wealth management, secondaries, and digital infrastructure, analysts are taking note of its potential for long-term success. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading slightly above its intrinsic value.

Company Overview and Recent Performance

Ares Management offers clients complementary primary and secondary investment solutions across credit, private equity, real estate, and infrastructure asset classes. The company’s diversified portfolio and strategic focus on high-growth sectors have positioned it well in the competitive landscape of alternative investments.

In the second quarter of 2025, Ares reported earnings per share (EPS) of $1.03, slightly missing expectations of $1.10. Despite this minor setback, the company’s overall financial health remains strong, with a current market capitalization of $48.82 billion. The company’s total debt stands at $13.47 billion, with a dividend yield of 3.01%. InvestingPro analysis reveals that Ares has maintained dividend payments for 12 consecutive years and has raised its dividend for 5 consecutive years, demonstrating consistent shareholder returns.

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Growth Drivers and Strategies

Ares has identified several key growth drivers that are expected to propel the company forward in the coming years. InvestingPro data shows the company has maintained a robust 17% revenue CAGR over the past five years, with analysts expecting continued growth of 10% in fiscal year 2025. These include:

1. Wealth Management: The company has raised its fiscal year 2028 (FY28) Wealth fundraising and management fee targets, indicating strong future revenue streams in this sector.

2. Secondaries: Ares is expanding its presence in the secondary market, which involves the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds.

3. Alternative Business Financing (ABF): This segment focuses on providing financing solutions to businesses that may not fit traditional lending criteria.

4. Digital Infrastructure: As the world becomes increasingly digitized, Ares is positioning itself to capitalize on investment opportunities in this growing sector.

These strategic focus areas demonstrate Ares’ commitment to diversifying its revenue streams and capturing market share in high-growth segments of the alternative investment industry.

Fundraising and Capital Deployment

One of Ares’ key strengths lies in its robust fundraising capabilities. The company has consistently exceeded expectations in terms of capital inflows, leading to increased guidance for the fiscal year. This strong fundraising performance provides a solid foundation for future growth and expansion.

As of the second quarter of 2025, Ares reported a record $151 billion in dry powder, indicating substantial capital available for investment opportunities. This significant war chest positions the company well to take advantage of market dislocations and attractive investment opportunities as they arise.

While deployment activities showed a slight quarter-over-quarter decrease in early 2025, they remained strong overall. The company’s ability to efficiently deploy capital across its various investment strategies will be crucial for maintaining its competitive edge and driving returns for investors.

Market Position and Competitive Landscape

Ares Management has established itself as a formidable player in the alternative investment space. Its diversified investment solutions across multiple asset classes provide a competitive advantage, allowing the company to weather market volatility and capitalize on opportunities across various sectors.

The company’s optimistic outlook regarding transaction activity in the second half of 2025 sets it apart from some of its peers. This confidence may stem from Ares’ strong fundraising capabilities and its ability to identify and execute on attractive investment opportunities.

Future Outlook and Projections

Analysts remain largely positive about Ares Management’s future prospects. According to InvestingPro data, analyst price targets range from $156 to $215, with a consensus recommendation of 2.19 (Buy). The company’s teach-in event for analysts in late September 2025 showcased its growth drivers and strategies, leading to increased confidence in its long-term trajectory.

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Earnings projections for the coming years reflect this optimism:

• For fiscal year 2025, EPS estimates range from $5.03 to $5.15
• For fiscal year 2026, EPS estimates range from $6.10 to $6.40

These projections suggest steady growth in the company’s earnings power over the next few years, driven by its strategic initiatives and market positioning.

Bear Case

How might increased operating expenses impact Ares’ profitability?

The slight EPS miss in the second quarter of 2025, attributed to higher corporate-level operating expenses, raises concerns about Ares’ cost management. If this trend continues, it could put pressure on the company’s profit margins and overall financial performance. Ares will need to demonstrate its ability to control costs effectively while pursuing its growth strategies to maintain investor confidence.

What risks does Ares face in the current economic environment?

Despite Ares’ strong position, the company is not immune to broader economic challenges. A potential recession or prolonged market volatility could impact the company’s ability to deploy capital effectively and generate returns. Additionally, regulatory changes affecting the alternative investment industry could pose challenges to Ares’ operations and profitability. The company will need to navigate these potential headwinds carefully to maintain its growth trajectory.

Bull Case

How could Ares’ strong fundraising capabilities drive future growth?

Ares’ exceptional fundraising performance is a key driver of its potential for future growth. The company’s ability to consistently exceed expectations in capital inflows provides a solid foundation for expanding its assets under management and generating higher fee-related earnings. This strong fundraising capability also allows Ares to pursue larger and more diverse investment opportunities, potentially leading to enhanced returns and market share growth.

What potential benefits could the GCP acquisition bring to Ares?

The acquisition of Global Collective Partners (GCP) is expected to bring several benefits to Ares, including a lower tax rate. This acquisition could potentially enhance Ares’ market position, expand its product offerings, and provide access to new client segments. The integration of GCP’s expertise and resources may also lead to synergies that could drive operational efficiencies and support Ares’ long-term growth objectives.

SWOT Analysis

Strengths:

• Diversified investment solutions across multiple asset classes
• Strong fundraising capabilities
• Robust capital deployment track record
• Strategic focus on high-growth sectors

Weaknesses:

• Recent increase in operating expenses
• Slight EPS miss in Q2 2025

Opportunities:

• Expansion in wealth management sector
• Growth in digital infrastructure investments
• Potential synergies from the GCP acquisition
• Increasing demand for alternative investments

Threats:

• Market volatility and potential economic downturn
• Regulatory changes affecting the alternative investment industry
• Intense competition in the asset management space
• Geopolitical risks impacting global investments

Analysts Targets

• Barclays: $200 (September 29th, 2025)
• JMP Securities: $205 (August 6th, 2025)
• Barclays: $200 (August 4th, 2025)
• JMP Securities: $185 (May 8th, 2025)
• JMP Securities: $165 (April 8th, 2025)

Raymond James maintains a "Market Perform" rating with no specific price target as of August 19th, 2025.

This analysis is based on information available up to September 29th, 2025, and reflects the views and projections of various financial analysts at that time.

InvestingPro: Smarter Decisions, Better Returns

Gain an edge in your investment decisions with InvestingPro’s in-depth analysis and exclusive insights on ARES. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore ARES’s full potential at InvestingPro.

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