Last Update 04 Mar 26

Fair value Decreased 4.13%

ARES: Future Returns Will Reflect Private Credit Resilience And Real Assets Expansion

The updated analyst price target for Ares Management moves lower, with our fair value estimate shifting from $177.94 to $170.59 as analysts factor in reduced expectations for business development company flows and realizations, as well as recent industry wide concerns around private credit, even as some still highlight what they see as attractive entry points for credit focused alternative managers.

Analyst Commentary

Recent Street research around Ares Management has become more mixed, with several firms cutting price targets while still seeing the company as an important player in private credit and alternative asset management. The focus has shifted to retail private credit flows, the impact of media scrutiny on the asset class, and how much of the sector wide derating is already reflected in valuations.

Bullish Takeaways

Bullish analysts argue that the broad selloff in private credit and alternative managers has gone too far given Ares Management's large credit footprint, which they see as already reflecting considerable sector risk in current valuation levels.
Some research highlights what they view as an attractive entry point for credit focused alternative managers, grouping Ares with other credit heavy peers that they believe can still execute on fundraising and deployment despite sentiment swings.
Certain banks point to what they describe as misinformation around private credit vehicles, suggesting the market reaction to headlines has created what they consider a dislocation between perceived risk and the long term role of private credit in portfolios.
Earlier in the research cycle, Ares Management was included in thematic lists for preferred alternative managers, with analysts flagging its scale in private credit as a differentiator for future fundraising and product development.

Bearish Takeaways

Bearish analysts are trimming price targets on Ares Management as they cut business development company related earnings assumptions, citing lower flow expectations and more cautious views on realizations from existing portfolios.
Concerns around retail private credit vehicles, including recent net outflows at a large non traded BDC, are viewed as a headwind for management fees and fee related earnings across the group, with Ares flagged as exposed, though to a lesser extent than some peers.
Several research updates tie Ares Management to broader negative sentiment around private credit, with the sector wide derating framed as a valuation drag until there is clearer evidence on credit performance and the durability of retail flows.
Where ratings remain positive or neutral, reduced price targets signal that analysts see less room for multiple expansion in the near term, given uncertainties around flows, media scrutiny of private credit products, and the pace of realizations.

What's in the News

Ares Management is reported to be open to acquiring a private equity firm to build out its leveraged buyout business, according to the Financial Times (Financial Times).
The company priced its second European Direct Lending CLO, EDL CLO II, at over €300 million, backed by a diversified pool of directly originated loans to more than 70 middle market companies across Western Europe.
Ares Management declared a quarterly dividend of $1.35 per share on its Class A and non voting common stock, payable on March 31, 2026, to stockholders of record as of March 17, 2026.
Ares Real Assets funds announced two U.S. data center transactions in Virginia, adding a 314 acre development site in Spotsylvania County and acquiring two 2025 vintage hyperscale data centers in Leesburg that are fully leased under 15 year triple net agreements.
Ares Management was added to several indices, including the S&P 500, S&P 500 Financials sector, S&P 500 Financial Services industry group, S&P 500 Value, S&P Composite 1500 and S&P Global 1,200, while being removed from the Russell Small Cap Comp Growth Index.

Valuation Changes

Fair Value: reduced slightly from $177.94 to $170.59, reflecting a modest reset in the overall assessment.
Discount Rate: moved marginally lower from 9.36% to 9.32%, indicating a very small adjustment to the risk assumption used in the model.
Revenue Growth: held effectively unchanged at about 9.53%, suggesting no material revision to top line expectations in the current framework.
Net Profit Margin: remained effectively stable at about 29.82%, with only a very small numerical adjustment in the model.
Future P/E: increased moderately from 24.0x to 24.7x, implying a slightly higher valuation multiple applied to projected earnings.

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Key Takeaways

Diversification across asset classes and international markets is strengthening Ares' growth prospects, fee stability, and global reach.
Increasing perpetual capital and a robust investment pipeline support recurring revenues, higher profitability, and greater earnings visibility.
Expanding competition, evolving industry trends, and regulatory pressures threaten Ares' margins, fee revenues, and long-term growth, especially given its exposure to retail and new business lines.

Catalysts

About Ares Management

Operates as an alternative asset manager in the United States, Europe, and Asia.What are the underlying business or industry changes driving this perspective?

Growing institutional and retail demand for alternative investments, fueled by persistent low-to-moderate interest rates and demographic-driven underfunded pensions, is accelerating Ares' AUM growth and providing strong visibility to future management and fee-related revenue.
Expansion into multiple asset classes (infrastructure, real estate, sports/media, secondaries), with recent successes like the GCP acquisition and the scaling of data center asset management, are expected to deliver higher management and development fees, supporting long-term revenue and FRE growth.
Robust international fundraising, particularly in Europe and Asia-Pacific, and ongoing success in deepening distribution partnerships, are broadening Ares' addressable markets, increasing global deal flow, and positioning the company for sustained earnings growth.
The significant ramp in perpetual capital (now nearly 50% of fee-paying AUM), combined with consistent investment performance and low client redemptions, is expected to drive higher recurring fee revenues, greater profitability, and improved earnings visibility.
High levels of un-deployed capital (dry powder) and a record investment pipeline position Ares to quickly convert AUM not yet paying fees into fee-generating assets, accelerating management fee and net earnings growth over the next 12-18 months.

Ares Management Earnings and Revenue Growth

Ares Management Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Ares Management's revenue will grow by 13.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.7% today to 31.2% in 3 years time.
Analysts expect earnings to reach $2.2 billion (and earnings per share of $8.32) by about September 2028, up from $369.5 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 44.9x on those 2028 earnings, down from 104.0x today. This future PE is greater than the current PE for the US Capital Markets industry at 26.7x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.66%, as per the Simply Wall St company report.

Ares Management Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competition in private credit and alternative assets is driving some peers to cut fees to attract capital, which could lead to future fee pressure and margin compression for Ares; this threatens long-term management fee revenue and FRE margins.
High reliance on perpetual capital and semi-liquid funds from the wealth and retail channels may increase exposure to cyclical shifts in retail investor sentiment or regulatory changes that could trigger elevated redemptions or asset outflows, negatively impacting AUM stability and future revenues.
Heavy investment in new business lines-such as data centers and sports/media/entertainment-comes with integration and execution risks, especially as current margin compression (from GCP acquisition) persists; if synergies or scale are not realized as planned, net margins and overall earnings growth could be impaired.
The growing democratization of access to alternatives (e.g., potential inclusion in 401(k)s and the rise of retail/passive products) may ultimately erode Ares' competitive advantage, as increased competition from low-fee entrants or technology-driven platforms could compress management fees and reduce long-term revenue growth.
Industry-wide secular risks-such as rising regulatory scrutiny, evolving tax regimes, and the shift toward ESG compliance-may raise operating costs, limit accessible markets, or disadvantage Ares if its exposure to less ESG-friendly sectors remains significant, potentially impacting both net margins and long-term earnings prospects.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $193.692 for Ares Management based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $215.0, and the most bearish reporting a price target of just $160.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.1 billion, earnings will come to $2.2 billion, and it would be trading on a PE ratio of 44.9x, assuming you use a discount rate of 8.7%.
Given the current share price of $175.07, the analyst price target of $193.69 is 9.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

ARES: Fee Strength And Credit Competitiveness Will Drive Long-Term Performance