Ares Management (ARES) Forms Logistics Partnership, Is The Stock A Bargain?

Why Ares Management Stock Is Back in Focus

Ares Management (ARES) has moved into the spotlight after Ares Real Estate launched a €1.5b European logistics partnership with Norges Bank Investment Management, a new platform centered on warehouses and distribution hubs.

Recent attention on Ares Management comes against a mixed backdrop. The share price is at US$122.08 after a strong 7 day share price return of 8.74%. However, the year to date share price return has declined 26.6%, while the 5 year total shareholder return of 69.18% points to much stronger long term results. This suggests that momentum has been rebuilding in the short term as investors weigh deals like the European logistics venture and the planned Infinity Transportation acquisition against a weaker recent price trend.

Spot similar logistics and real asset stories by scanning our curated list of 21 high quality undiscovered gems, which, like Ares Management, are tying fresh capital to real-world infrastructure demand.

Ares Management has a fresh logistics deal, a falling year to date chart and a sharp weekly rebound. Is that bounce about better business fundamentals or a swing in sentiment, and what does the current valuation imply?

Most Popular Narrative: 16% Undervalued

Ares Management is framed as undervalued in the leading narrative because its fair value estimate of $144.80 sits above the recent $122.08 close, while still reflecting a higher 8.71% discount rate and only moderate revenue and margin assumptions.

High levels of undeployed capital, including about US$170b of dry powder at a time when direct lending spreads, OID and covenants have become more lender friendly, position Ares Management to put more capital to work on attractive terms and translate committed but non fee-paying AUM into higher management fees and net earnings.

See why 27 investors see Ares Management as 16% undervalued.

Result: Fair Value of $144.80 (UNDERVALUED)

Still, wealth channel redemption pressure and the risk that new data center and real asset platforms underdeliver on fee-related earnings could quickly challenge this Ares Management undervaluation story.

Find out about the key risks to this Ares Management narrative.

Another View: What Multiples Say About Ares Management

There is a different signal when looking at Ares Management through its P/E ratio. The stock trades around 57x earnings, compared with about 38.3x for the US Capital Markets industry and roughly 20x for peers, while the fair ratio sits near 21.7x. That gap points to valuation risk if sentiment cools, even if the business keeps executing.

For a closer look at how this pricing stacks up against earnings power, our valuation breakdown lays out the numbers behind that gap in full. This includes how the market could move closer to the fair ratio over time, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Mixed signals on Ares Management can feel messy, which is exactly why checking the underlying data yourself matters more than ever right now. To see how optimism and concern balance out in the numbers, weigh the 2 key rewards and 3 important warning signs.

Looking for more Ares Management style investment ideas?

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