Critical Analysis: Ares Management (ARES) vs. Its Peers

Ares Management (NYSE:ARES) is one of 1,743 public companies in the “Capital Markets” industry, but how does it weigh in compared to its peers? We will compare Ares Management to related companies based on the strength of its institutional ownership, dividends, profitability, valuation, analyst recommendations, earnings and risk.

Insider and Institutional Ownership

50.0% of Ares Management shares are owned by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are owned by institutional investors. 34.7% of Ares Management shares are owned by insiders. Comparatively, 12.9% of shares of all “Capital Markets” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Ares Management and its peers gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Ares Management	$5.76 billion	$527.36 million	113.23
Ares Management Competitors	$5.22 billion	$399.89 million	17.35

Ares Management has higher revenue and earnings than its peers. Ares Management is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Ares Management and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ares Management	7.51%	25.81%	6.24%
Ares Management Competitors	317.76%	10.36%	3.68%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Ares Management and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Management	0	9	11	1	2.62
Ares Management Competitors	5574	20179	22519	647	2.37

Ares Management presently has a consensus price target of $146.21, indicating a potential upside of 4.13%. As a group, “Capital Markets” companies have a potential upside of 23.19%. Given Ares Management’s peers higher possible upside, analysts clearly believe Ares Management has less favorable growth aspects than its peers.

Dividends

Ares Management pays an annual dividend of $5.40 per share and has a dividend yield of 3.8%. Ares Management pays out 435.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 29.2% of their earnings in the form of a dividend. Ares Management has raised its dividend for 7 consecutive years.

Risk and Volatility

Ares Management has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500. Comparatively, Ares Management’s peers have a beta of 0.79, indicating that their average stock price is 21% less volatile than the S&P 500.

Summary

Ares Management beats its peers on 12 of the 15 factors compared.

About Ares Management

Ares Management Corporation is a global alternative investment manager that provides investment solutions across credit, private equity, real estate and infrastructure. Its strategies include direct lending, liquid and opportunistic credit, asset-based finance, private equity investing, and real estate debt and equity. Founded in 1997, the firm serves institutional and individual investors through investment funds and other vehicles. Ares operates across North America, Europe and the Asia-Pacific region.