Ares Management Corporation (ARES) — Quantitative Forecast & Factor Scores
ARES screens as lower-quality and premium-valued with positive catalysts — DCF model implies a +30% margin of safety at current levels.
ARES's quantitative grade is Buy, with elevated downside risk (CVaR -30.5%), and quality metrics (net margin 9%, ROE 14%). Ares Management Corporation (ARES) trades at $107.13 with a valuation grade of Buy: a trailing P/E of 62.6x at a 347% premium to sector median, net margins of 9.4%, a DCF-implied intrinsic range of $97–$181 suggesting a +30% margin of safety, beta 1.56 (highly aggressive risk profile).
Key Takeaways
- Valuation: Buy grade — P/E 62.6x — DCF range $97–$181 implies +30% margin of safety
- Risk: CVaR -30.5% (95th percentile, 1-month) indicates moderate tail exposure; beta of 1.56 amplifies broad market moves in both directions
- Strengths: 9% net margin, 14% ROE dominate the factor profile
- Watch: Value score of 2.0/5 signals premium pricing
Quantitative Factor Profile
Key Metrics
| Metric | Value |
|---|---|
| Current Price | $107.13 |
| P/E Ratio (TTM) | 62.6x |
| Forward P/E | 14.1x |
| P/S Ratio | 6.3 |
| EV/EBITDA | 34.8 |
| Beta | 1.56 |
| Net Margin | 9.4% |
| ROE | 13.5% |
| Debt/Equity | 163.4% |
| Dividend Yield | 4.95% |
| CVaR (95%, 1M) | -30.5% |
| Market Cap | $35.5B |
Earnings History
| Quarter | EPS Est. | EPS Actual | Surprise |
|---|---|---|---|
| Q4 2025 | $1.69 | $1.45 | -14.0% ✗ |
| Q3 2025 | $1.14 | $1.19 | +4.0% ✓ |
| Q2 2025 | $1.09 | $1.03 | -5.8% ✗ |
| Q1 2025 | $0.94 | $1.09 | +15.9% ✓ |
ARES vs. Sector Peers
| Ticker | P/E (TTM) | Beta | CVaR-95 | Net Margin |
|---|---|---|---|---|
| ARES | 62.6x | 1.56 | -30.5% | 9.4% |
| BX | 29.6x | 1.79 | -24.2% | 21.2% |
| KKR | 39.1x | 2.01 | -26.0% | 9.2% |
| APO | 20.1x | 1.64 | -21.5% | 11.0% |
| CG | 22.3x | 2.06 | -20.4% | 20.1% |
ARES shows mixed quality signals in the factor model, at a fully-priced valuation with limited margin of safety.
ARES trades at 62.6x trailing earnings — 347% above the Financials sector median of 14.0x. This combination — premium multiple, decelerating outperformance — is historically where risk/reward becomes asymmetric. Not a reason to sell; a reason to size carefully. The DCF model implies a +30% margin of safety — the risk/reward is currently skewed to the upside.
The Buy is directionally right, but I hold it with discipline. A 63x trailing multiple on a business still building its margin profile is not a comfortable position — it requires the thesis to keep delivering. The variable I track most closely is gross margin trajectory. That multiple can only be sustained if operating leverage is real — specifically whether the margin profile at scale supports what the market is already pricing in, or whether that future still needs to be earned. If the thesis holds across the next two quarters, I would be comfortable carrying this at a meaningful weight. If not — specifically, if margins disappoint or the earnings beat streak breaks — I would reduce before the market fully reprices.
Is ARES a buy, hold, or sell?
ARES carries a valuation grade of Buy. The trailing P/E of 62.6 sits 347% above the Financials sector median of 14.0x — a premium that demands sustained earnings delivery. Our discounted cash flow model produces an intrinsic range of $97–$181 — implying a +30% margin of safety at the current price of $107.13. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate.
With a 50% beat rate on recent quarters, earnings predictability has been mixed. The most recent quarter missed by a 14.0% earnings surprise. Analyst estimate revisions are trending upward.
What are ARES's key risk factors?
With a beta of 1.56, ARES exhibits a highly aggressive risk profile relative to the broad market. The 95th-percentile CVaR of -30.5% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 3.1% of total portfolio loss in the worst 5% of months. Net margins of 9.4% fall below the Financials sector average of 28%, suggesting margin pressure. Leverage is moderate with debt-to-equity at 163%.
A put/call ratio of 1.15 indicates roughly balanced sentiment in the options market. Implied and realized volatility are roughly aligned at 56.4% and 51.9% respectively. Insiders have been net sellers to the tune of $1469.5M recently. While routine dispositions are common, the magnitude bears watching. Short interest stands at 5.8% of float, a moderate level.
How does ARES fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — ARES carries a beta of 1.56, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all holdings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
As a Financials constituent, ARES's risk profile should be evaluated alongside sector peers when constructing diversified portfolios.
True portfolio risk is a function of the full covariance structure across all holdings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The ARES analysis here is a single node in that larger structure.
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Launch Live Analysis →This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-04-01 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with Ares Management Corporation.