Ares Results Beat Wall Street Estimates. The Stock Rose.

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Ares stock is down more than 12% this year.

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Ares Management’s second-quarter results beat Wall Street expectations Thursday, causing shares to rise about 8%.

Ares (ticker: ARES) said after-tax realized income was $233.3 million, or 74 cents a share, for the quarter ended June 30. This is up from $192 million, or 64 cents, for the same period in 2021. Analysts polled by FactSet had expected 69 cents a share.

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The Los Angeles firm reported $39.7 million in net income, or 21 cents a diluted share. This compares to about $125 million, or 69 cents a diluted share, for the same period in 2021.

Total revenue dropped by about 54% to $601.4 million, surpassing Wall Street estimates of $587.7 million.

Ares stock is down more than 12% this year. It closed at $71.28 Thursday.

“Despite the market volatility and uncertain macroeconomic environment, our second-quarter results highlight the resiliency and stability of our business as we generated growth of 35% or more in both our assets under management and our fee-related earnings and we continued to perform well for our investors,” said Michael Arougheti, CEO and president of Ares, in a statement,

Ares, an alternative investment manager, has several different businesses. It is a direct lender to US and European middle-market companies. It has a private-equity business that takes controlling stakes and invests in distressed situations. It also has real estate and infrastructure divisions. In 2021, Ares launched a wealth management business that targets high-net-worth retail investors and financial advisors.

Ares is the latest alt manger to report results. Earlier Thursday, the Carlyle Group (CG) posted second-quarter earnings that beat expectations. Last week, Blackstone (BX) reported a Q2 net loss but turned in higher distributable earnings—the cash available to pay dividends—than Wall Street expected.

Ares fee-related earnings—which are mainly management fees and fee related performance revenue—rose 49% to $219.8 million. Ares assets under management jumped 35% to $334.3 billion.

Ares expects to begin fundraising for four of its largest funds during the second half of this year, said Rufus Hone, an analyst with BMO Capital Markets, in a note. The four funds alone are expected to raise more than $30 billion, Hone said.

“ARES’s strong fundraising outlook (oriented away from the more-crowded PE market) provides significant visibility into meaningful FRE growth in the coming years,” said Hone, who has an outperform rating on the stock. He increased his price target to $93 a share from $82.

Write to Luisa Beltran at [email protected]


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