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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Ares Management Corporation (XNYS:ARES) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ARES
Name:
ARES MANAGEMENT CORPORATION (XNYS:ARES)
Sector:
215.63M
Industry:
Asset Management
CEO:
Mr. Michael Arougheti
Total Employees:
2,100
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -92.33% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ARES MANAGEMENT CORPORATION(ARES) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND ASSET MANAGEMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
72.75
One Month Price Target:
$73.24
Six Month Price Target :
$75.7
Likely Price in One Year's Time:
Ticker:
$78.66
Likely Trading Range Today Under (Normal Volatility)
$72.53
Price Upper limit ($) :
$73.19
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$68.84
This week:
$64.01
This month :
$55.26
Other Primary facts
Market Cap:
21.22B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
290.42M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.41%
-14.45%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$90.87
$82.39
$54.63
$63.11
Medium risk (<10%) entry points
Buy Call
Sell Call
$79.63
Buy Put:
Sell Put:
$77.82
$65.85
$67.68
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ARES
Sharpe Ratio:
5.20%
Comparison:
ARES, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 546.20% higher than the industry
& ratio is 127.96% higher than the market/S&P 500 average
Average Returns/Yield of
ARES
Daily returns:
0.15%
Weekly returns:
0.74%
Monthly returns:
2.97%
Yearly returns:
9.18%
Comparison of returns:
Average annual returns/yield (last 3 years) is 288.32% above industry average
Classification:
ARES, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.64
Statistical test of Returns:
ARES has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.69%
Weekly Volatility:
6.01%
Monthly Volatility:
12.03%
Yearly Volatility:
41.66%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.96%
Volatility in last five trading days has been -64.34% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.37%
Weekly VaR:
-12.02%
Monthly VaR:
-24.04%
How Much Can the price of
ARES
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-20%
Worst case (decline):
-83.26%
This translates to price declining to:
$58.53
This translates to price declining to:
$12.18
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ARES is a 69.64% riskier investment compared to the market/S&P 500 & is 45.33% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 3.49% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ARES
Beta in relation to market/S&P 500--1.21
Expected beta in 1 year's time:
0.863
Expected beta in 3 year's time:
1.22
Unlevered (debt free) Beta:
0.163
Beta in relation to Nasdaq (XNAS):
1.075
Beta in relation to all global stocks::
0.86
Beta Comparison & Analysis
Beta of competitors/peers::
1.117
Beta is 8.17% higher than peers
Average Industry Beta:
1.694
Beta is -28.71% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
10.63%
Sustainable growth rate is -62.28% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.242
Alpha is -534.89% below industry average alpha yield
Alpha is 1543% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ARES
Equity cost of capital:
0.114
Equity cost of capital is -22.58% below industry mean WACC
Unlevered (without debt) cost of capital:
1.55%
Before-tax cost of debt:
2.42%
After-tax cost of debt:
1.91%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.91%
WACC is -22.46% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$14.70
Revenue growth rate per share of (3Y):
5.76
Annual revenue growth rate is 38.21% above the industry average
EPS:
$1.94
Expected Annual growth rate of EPS (3Y):
22.69%
Expected future EPS growth rate is -18.30% lower than the Asset Management industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: 6.03%
Equity growth rate per share is -71.48% lower than the industry
Debt per share
$43.17
EBITDA per share
$2.91
Valuation Analysis Today of
ARES
P/E Ratio:
48.15
P/E Ratio of Competitors/Peers:
9.29
P/E ratio is 418.33% higher than main peers & is 198.21% higher than the industry
Stock price/value with industry average P/E ratio: $31.33
ARES is 132.23% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $78.82
Present value of the expected future dividends only: $55.22
P/S (Price to Sales ratio):
4.95
Price to sales ratio is -27.76% below the industry mean
P/B (Price to book value ratio):
5.76
-
-
Net income growth rate (3Y):
320.57%
Net income growth rate is 120.51% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 53.46%
Dividend yeild: 2.97%
Previous Dividend: $0.61
Previous adjusted dividend: $0.61
Previous Dividend: $2.16
Expected next dividend best case: $0.68
Expected next dividend worst case: $0.54
Average dividend payment (long-term): $0.46
Average dividend increase/decrease (growth rate) % per period: 7.23%
Expected next dividend payment date: 28/09/2022
Expected next dividend record date: 14/09/2022
-
Previous dividend payment date: 30/06/2022
Previous dividend record date: 16/06/2022
-
Dividend History:
2022-06-15--$0.61
2021-12-16--$0.47
2021-06-15--$0.47
2022-03-16--$0.61
2021-09-15--$0.47
2021-03-16--$0.47
Dividend growth rate is 30.94% higher than the average industry
In-depth Debt & Leverage Analysis
Debt to equity ratio:
740.53%
Net debt to equity ratio:
700.12%
Debt to assets ratio:
59.33%
Net debt to assets ratio:
56.09%
Debt-to-asset ratio is 13.52% above industry average
Ability to repay debt:
Interest coverage ratio:
2.76
Interest coverage ratio is -95.37% less than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 7.13%
Analysis of Key Statistics
Correlation of price movement with the market:
0.761
Statistical significance of correlation:
ARES has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.576
Stock price is 32.08% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.576
Correlation of price movement with Nasdaq (^IXIC):
0.017
Covariance of price movement with the market:
0.027
Kurtosis
6.926
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.155
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
ARES
Gross Profit Margin Ratio:
125%
Operating Profit Margin Ratio:
18.09%
Operating profit margin is -61.55% lower than the industry
Net Profit Margin Ratio:
125%
Effective Tax Rate:
13.70%
Effective tax rate is -43.91% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
23.41%
Return on equity (ROE) is -7.40% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.88%
Return on assets (ROA) is -67.86% lower than the industry
Financial Leverage:
2.5x
Current Ratio:
0.46
Current ratio is -88.02% below industry average
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 1.4 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
2.0M
Each employee generates 46% more revenue than industry average revenue per employee
EBITDA generated per employee:
402.4K
Each employee generates -153% less EBITDA than industry average revenue per employee
Profit generated per employee:
188.7K
Each employee generates -115% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
102.7K
Each employee generates -186% less free cash flow than industry average revenue per employee
Assets/Capital per employee
9.3M
Each employee generates -186% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ARES
SANTANDER CONSUMER USA HOLDINGS INC. (XNYS:SC)
COMERICA INCORPORATED (XNYS:CMA)
CNA FINANCIAL CORPORATION (XNYS:CNA)
LINCOLN NATIONAL CORPORATION (XNYS:LNC)
LUFAX HOLDING LTD (XNYS:LU)
WESTERN ALLIANCE BANCORPORATION (XNYS:WAL)
apo MultiAsset Mandat Protect PB
Nomura Holdings, Inc. (XNYS:NMR)
AMERICAN FINANCIAL GROUP, INC. (XNYS:AFG)
Current Analyst Ratings
Strong buy�8%
Buy�21%
Hold�8%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
4.27B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.94B
1.33B
-
497.05M
497.05M
-
62.83M
559.87M
452.68M
306.75M
-
845.11M
772.04M
396.32M
1.04B
142.04M
396.32M
Statement of Cash Flow
Date:
Period:
-
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
127.55M
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
- 44299.00K
Net Cash Provided by Operating Activities:
224.15M
Investments in PP&E:
- 8524.00K
Net Acquisitions:
- 301624.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
829.25M
-
829.25M
799.93M
-
-
1.63B
161.09M
1.00B
1.49B
16.52B
-
326.04M
19.50B
-
21.13B
357.18M
145.09M
-
-
3.04B
3.54B
12.54B
1.38B
13.92B
-
17.46B
2.94M
- 154925.00K
- 6019.0K
-
March 31, 2022 at 6:00:00 AM
3.50B
1.69B
19.16B
-
12.68B
11.9B
-
-
- 310148.00K
- 962457.00K
-
-
- 211886.00K
1.27B
93.04M
- 4652.00K
2.39M
346.04M
343.66M
224.15M
- 8524.00K
215.63M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
ARES
2023
2024
2025
2026
2027
$83.34
$90.11
$97.42
$105.33
$113.88