Ares Management Corp (ARES 6.01%), a major alternative investment manager, reported first-quarter results that fell short of both earnings and revenue forecasts.
The company yesterday said net income tumbled 22% from the year-earlier period to $73 million, or $0.33 per share (EPS), from $94 million, or $0.49. The average analyst forecast was for EPS of $0.92, according to FactSet. The decline came from a loss attributed to carried interest allocation -- fees asset managers collect as a share of profits on investments -- as well as higher interest and overhead expenses.
Revenue also fell from the 2023 quarter, declining 13% to $707 million from $813 million. Analyst estimates anticipated $749 million.
| Metric | Result | Estimate | Prior Year | % Change |
|---|---|---|---|---|
| EPS | $0.80 | $0.92 | $0.49 | 63% |
| Revenue | 707M | $749M | $813M | -13% |
| AUM | $428B | N/A | $360B | 19% |
| Dividend Per Share | $0.93 | N/A | N/A | N/A |
Data sources: Company results from company. Analyst estimates from FactSet.
Ares Management overview
Ares Management, based in Los Angeles, specializes in investing in credit, private equity, and real estate markets.
Recently, Ares has focused on increasing its assets under management (AUM), which rose 19% from a year earlier to $428 billion. This included $17 billion in new fundraising to use for additional investments.
NYSE: ARES
Key Data Points
Quarterly highlights
Although Ares Management missed on both EPS and revenue forecasts, the company declared a quarterly dividend of $0.93 per share, reflecting management's confidence in its operational model.
The dividend, in light of an EPS and revenue miss, presents an interesting balance between returning value to shareholders while managing profit expectations. The dividend could reassure investors of Ares's commitment to shareholder returns.
Looking ahead
Management expressed optimism about Ares's trajectory, citing an extensive available capital pool and a robust pipeline for new investments. These factors are believed to substantially contribute to future growth, especially if coupled with an uptick in transaction activity.
Investors should monitor Ares's ability to deploy capital efficiently and maintain dividend payouts. The firm's future performance, particularly in enhancing AUM and generating revenue, will be crucial markers of its ability to navigate market challenges and seize growth opportunities.
