Ares Management Corporation (ARES) | Investment Case

1. Company Snapshot

1.a. Company Description

Ares Management Corporation operates as an alternative asset manager in the United States, Europe, and Asia.The company's Tradable Credit Group segment manages various types of investment funds, such as commingled and separately managed accounts for institutional investors, and publicly traded vehicles and sub-advised funds for retail investors in the tradable and non-investment grade corporate credit markets.Its Direct Lending Group segment provides financing solutions to small-to-medium sized companies.

The company's Private Equity Group segment focuses on majority or shared-control investments primarily in under-capitalized companies.Its Real Estate Group segment invests in new developments and the repositioning of assets, with a focus on control or majority-control investments; and originates and invests in a range of self-originated financing opportunities for middle-market owners and operators of commercial real estate.The firm was previously known as Ares Management, L.P. Ares Management Corporation was founded in 1997 and is headquartered in Los Angeles, California with additional offices in the United States, Europe and Asia.

Ares Management GP LLC is the general partner of the company.

Show Full description

1.b. Last Insights on ARES

Breaking News: Ares Management Corporation has not released recent earnings, however concerns are rising over risky loans in private credit. Goldman Sachs Asset Management's global co-head of private credit Vivek Bantwal warns investors to be cautious. Specifically, Blue Owl Technology Finance's portfolio is heavily exposed to software borrowers financed using annualized recurring revenue, a strategy now facing skepticism due to artificial intelligence disruption. Some analysts are advising investors to avoid certain areas in private credit. Recommendation to buy or hold or sell has not been made by major analysts recently.

1.c. Company Highlights

Last Price	105.87
Change Percentage	-1.96%
Open	107.92
Previous Close	107.99
Market Cap ( Millions)	34769
Volume	3960578
Year High	195.26
Year Low	95.8
M A 50	135.81
M A 200	160.13

FCF Yield	2.97%
Dividend Yield	4.45%
ROE	12.01%
Debt / Equity	348.79%
Net Debt / EBIDTA	613.88%
Price To Book	5.48
Price Earnings Ratio	44.4
Price To FCF	33.63
Price To sales	8.86
EV / EBITDA	29.91

2. Ares Management Corporation's Strong FY2025 Results and Optimistic 2026 Outlook

Ares Management Corporation reported strong financial performance for FY2025, with management fees reaching a record $3.7 billion, growing 25% year-over-year. Fee-related earnings (FRE) margins increased meaningfully in the fourth quarter and modestly for the full year despite margin headwinds from the GCP acquisition. The company's realized income for the full year exceeded $1.8 billion, a 26% increase from 2024. Actual EPS came out at $1.45, relative to estimates at $1.71. Revenue growth is estimated to be 19.9% next year.

Publication Date: Feb -06

                                    📋 Highlights
                                    Record AUM and Fundraising::
                                                AUM surged 29% YoY to $622 billion, while 2025 fundraising hit a record $113 billion ($36 billion in Q4).
Dividend Increase and Income Growth::
                                                Q1 2026 dividend rose 20% to $1.35/share, reflecting >20% realized income growth expected in 2026 ($1.8 billion in 2025).
Deployment Surge::
                                                Q4 deployment reached $46 billion, with full-year gross deployment soaring 37% YoY to $146 billion.
Credit Strategy Expansion::
                                                Raised $65+ billion across credit strategies in 2025, with new U.S. and European lending funds planned for 2026–2027.
Fee-Related Earnings Growth::
                                                Management fees hit $994 million in Q4 (27% YoY) and $3.7 billion annually (25% YoY), with FRE margins expanding meaningfully in Q4.

                                

Business Performance

The company's private equity business is positioned to take advantage of a meaningful pipeline of new investments and potential realizations. Ares raised over $65 billion across its credit strategies in 2025 and expects to launch its fourth U.S. senior direct lending fund later this year and its seventh European direct lending fund in early 2027. Total fundraising for 2025 reached a record $113 billion, with $36 billion raised in the fourth quarter.

Valuation and Dividend

With a P/E Ratio of 41.2 and a P/B Ratio of 5.99, the market is pricing in significant growth expectations. The Dividend Yield is 3.68%, indicating a relatively attractive yield for investors. The company's ROE is 15.46%, suggesting a decent return on equity. Ares increased its first-quarter dividend by 20% to $1.35, reflecting confidence in achieving 20% plus growth in realized income in 2026.

Growth Prospects

Ares expects its total fundraising for 2026 to be as good or better than its record year in 2025 and anticipates strong demand from institutional investors for its largest funds in alternative credit and U.S. direct lending. The company has a high level of optimism, substantial dry powder of $156 billion, and a strong pipeline of investments. The integration of the GCP acquisition is going well, and the company expects to see more expense savings and revenue enhancements in 2026.

Risk Management

The company's software exposure represents about 6% of its total investments, with most of it in senior secured loans. The software portfolio is highly diversified, with low loan-to-value ratios and high EBITDA margins. Ares believes its business is well-prepared to navigate challenges, including AI software-related risks.

3. NewsRoom

Investors Are Fleeing Private Credit. What the Funds Should Do Now.

17:28

Source: barrons.com

Yield Of Dreams: A High-Yield Dividend Retirement Portfolio Without The Nightmares

11:05

Source: seekingalpha.com

Software Loans Went From Catnip to Kryptonite. Where Are They Now?

Mar -17

Source: barrons.com

This is what investors should AVOID in private credit, Goldman Sachs exec says

Mar -17

Source: youtube.com

Ares Management: Dividend Yield Spikes On 20% Hike And AI Ghosts, AUM Hits Record

Mar -16

Source: seekingalpha.com

Advent International L.P. Sells 120,800 Shares of Ares Management Corporation $ARES

Mar -15

Source: defenseworld.net

Deploy Cash Now Into Double-Digit Yielding Passive Income

Mar -14

Source: seekingalpha.com

BDC Tailwinds Are Building, Not Breaking

Mar -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

High Yield Bonds

Ares Management Corporation invests in high yield bonds, providing financing to companies with below-investment-grade credit ratings.

Leveraged Loans

Ares Management Corporation invests in leveraged loans, providing financing to companies with high levels of debt.

Private Equity

Ares Management Corporation provides private equity investments, taking an active role in guiding portfolio companies' growth and operations.

Real Assets

Ares Management Corporation invests in real assets, including infrastructure, real estate, and energy projects.

Credit Opportunities

Ares Management Corporation provides credit opportunities investments, focusing on distressed or undervalued debt securities.

8. Ares Management Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Ares Management Corporation operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the availability of alternative investment options.

Bargaining Power Of Customers

Ares Management Corporation's customers are primarily institutional investors, who have limited bargaining power due to the company's strong brand reputation and diversified investment offerings.

Bargaining Power Of Suppliers

Ares Management Corporation has a diversified supplier base, and the company's suppliers have limited bargaining power due to the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the alternative investment management industry, including regulatory hurdles and the need for significant capital and expertise.

Intensity Of Rivalry

The alternative investment management industry is highly competitive, with many established players competing for market share and investor capital.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	89.27%
Debt Cost	6.28%
Equity Weight	10.73%
Equity Cost	9.84%
WACC	6.66%
Leverage	832.15%

11. Quality Control: Ares Management Corporation passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

BNY Mellon

A-Score: 6.7/10

Value: 4.6

Growth: 6.4

Quality: 5.7

Yield: 5.0

Momentum: 9.0

Volatility: 9.7

1-Year Total Return ->

BlackRock

A-Score: 5.7/10

Value: 2.2

Growth: 5.3

Quality: 7.9

Yield: 4.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

Ameriprise Financial

A-Score: 5.7/10

Value: 4.4

Growth: 8.0

Quality: 7.6

Yield: 2.0

Momentum: 3.5

Volatility: 8.7

1-Year Total Return ->

Ares Management

A-Score: 4.8/10

Value: 1.1

Growth: 5.7

Quality: 5.5

Yield: 6.0

Momentum: 4.5

Volatility: 6.3

1-Year Total Return ->

Blackstone

A-Score: 4.8/10

Value: 0.3

Growth: 4.1

Quality: 7.4

Yield: 7.0

Momentum: 3.5

Volatility: 6.7

1-Year Total Return ->

KKR

A-Score: 4.5/10

Value: 2.9

Growth: 6.6

Quality: 6.3

Yield: 2.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.63%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.66%

Ares Management Corporation - US03990B1017

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ARES

1.c. Company Highlights

Expensive

Strong Momentum

Average Growth

Earnings Miss

Earnings Beats

Revenues Beats

Average Quality

Stable Momentum

Revenues Miss

Medium Volatility

Higher Growth

Lower Quality

2. Ares Management Corporation's Strong FY2025 Results and Optimistic 2026 Outlook

Business Performance

Valuation and Dividend

Growth Prospects

Risk Management

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.00%)

6. Segments

Credit Group

Expected Growth: 10.5%

Real Assets Group

Expected Growth: 8.5%

Secondaries Group

Expected Growth: 9.5%

Private Equity Group

Expected Growth: 8.0%

Other

Expected Growth: None%

Unconsolidated Performance (Income) Loss-Unrealized

Expected Growth: None%

Unallocated Administrative Fees

Expected Growth: None%

Unallocated Principal Investment Income, Net of Eliminations

Expected Growth: None%

Unallocated Income before Taxes of Non-Controlling Interests in Consolidated Subsidiaries

Expected Growth: None%

Unallocated OMG Expense, Net

Expected Growth: None%

Administrative, Transaction and Other Fees of Consolidated Funds Eliminated in Consolidation

Expected Growth: None%

Unallocated Performance Income of Consolidated Funds Eliminated In Consolidation

Expected Growth: None%

Unallocated Management Fees of Consolidated Funds Eliminated in Consolidation

Expected Growth: None%

7. Detailed Products

Direct Lending

High Yield Bonds

Leveraged Loans

Private Equity

Real Assets

Credit Opportunities

8. Ares Management Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Ares Management Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.e Scoring ^Insights

12.f DCF ^BETA