Ares Management Corporation ARES
Verdict: Hold. Fair value $174 against a price of $176 on 12 Jan 2026, 1% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Receivables grew 31.2% YoY while Revenue grew only 7.0%, leading to a DSRI of 1.23.. Depreciation expense dropped 31.5% ($231.7M to $158.6M) despite revenue growth and stable assets,.... OCF was negative in 2021, 2022, and 2023 before surging to $2.79B in 2024, indicating lumpy cash....
Main risks
- Downside survival at risk: 22 months runway
- Potential/actual debt covenant breach
- Thin revenue cushion: 0.3% decline causes EBIT loss
- High risk of earnings miss: The company has a 50% beat rate over the last four quarters with an aver...
- High leverage: Net Debt/EBITDA at 5.05x and Debt/Equity at 2.94 are significantly elevated.
- Receivables grew 31.2% YoY while Revenue grew only 7.0%, leading to a DSRI of 1.23.