Ares Management (ARES), What Is Behind The Fresh Attention?
Ares Management (ARES) has expanded its Ares Infrastructure Equity funds into Europe with a minority stake in Statera Energy’s 1.9GW UK storage and flexible generation portfolio, bringing renewed attention to the stock’s energy transition exposure.
The Ares Management share price has been under pressure, with the stock down 9.6% over the past month and 32.5% on a year to date share price basis. At the same time, the 5 year total shareholder return of 61.4% points to stronger long run compounding in the background.
Scan other alternative asset managers leaning into the energy transition with our curated list of 20 high quality undiscovered gems that share Ares Management’s focus on specialized, higher conviction opportunities.
Ares Management has given back a chunk of its past gains even as energy transition assets move further into the portfolio. Is the meaningful rerating still ahead, or was most of the upside left at higher prices?
Most Popular Narrative: 24% Undervalued
Against Ares Management’s last close of $112.27, the most followed narrative tags fair value at $147.89. This frames recent share price weakness as a gap between current sentiment and longer term expectations.
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 24% undervalued.
Result: Fair Value of $147.89 (UNDERVALUED)
Still, the bullish narrative around Ares Management could be tested if wealth channel redemptions accelerate again or if newer real assets platforms underdeliver on fee contribution.
Find out about the key risks to this Ares Management narrative.
Another View: Ares Management Looks Expensive On Earnings
The fair value narrative paints Ares Management as undervalued, yet the earnings multiple tells a very different story. The stock trades on a P/E of 52.4x, compared with 38.1x for the US Capital Markets industry, 19.8x for peers, and a fair ratio of 21.5x based on regression analysis.
That means investors are currently paying more than double the fair ratio for each dollar of earnings. This raises clear pricing risk if expectations cool or sector sentiment normalizes. The key question is whether you think the quality of Ares Management’s fee streams and growth outlook can justify that kind of premium.
See what the numbers say about this price in our valuation breakdown See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Mixed signals around Ares Management's valuation and fundamentals only matter if you act on them. Look through the underlying data and pressure test your own thesis using our breakdown of 3 key rewards and 3 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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