ARES MANAGEMENT CORPORATION (ARES): what the price requires

At today's price, ARES MANAGEMENT CORPORATION (ARES) is priced for today's economics sustained for ~20.5 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ARES

Headline

FieldValue
TickerARES
CompanyARES MANAGEMENT CORPORATION
Current price$120.08/sh
CompositionCredit Group 70% / Real Assets Group 19% / Secondaries Group 8% / Private Equity Group 4%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfee-financial
Price-to-earnings88.3x
Earnings yield1.1%

The GAAP earnings base is materially attributable to non-controlling interests; the implied growth and duration are suppressed as distorted. The multiple is the honest statement.

Solve inputs: computed at a 12.6% cost of equity; growth searched up to the 20% fee-earnings ceiling; each 1pp moves the implied horizon ~2.8 years.

Reconcile: at the x-ray's 9.3% required return this reads ~12.4 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history-0.22σ
cohort percentile (of 50 peers)100
sustained it ~10 years at this level11%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset6.25x3expensive
Earnings6.12x1expensive
Relative2.12x2expensive
Growth0.58x2justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.

Per-Model Detail (n=8)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$257.220.47xyesFCF base $1.8B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.0%, 7yr projection
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$56.612.12xyesP/S fallback (negative EPS): Sector P/S 3.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$21.505.59xyesBV/sh $26.69, ROE (TTM) 7.5%, ke 9.3%
Two-Stage Excess ReturnAsset$19.216.25xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$174.230.69xyesRev $5.9B, growth 30% (input: historical growth; tapered), Terminal P/S: 5.1x / 6.4x / 7.6x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$18.876.36xyesBV $26.69 + 5yr PV of (ROE (TTM) 7.5% − Kₑ 9.3%) × BV; BV grows 4.8%/yr
Graham NumberAsset——no—
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings$19.636.12xyesFCF $1679.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$0.0112008.00xyesSBC-adj FCF $0.99B (FCF $1.68B − SBC $0.69B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$56.612.12xyesRevenue $5.91B × sector P/S 3.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$0
Net debt / NOPAT (after-tax)0.00x
Net debt / operating income (pre-tax)0.00x
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

One number carries the bull case, and it is the management-fee line. In the first quarter of 2026 those fees crossed $1 billion for the first time, up 22% from the prior-year period. That matters because management fees are the part of an asset manager's revenue that does not depend on markets going up. They are charged on committed and invested capital, they recur, and they compound as the firm raises more money. Fee-related earnings, the cleanest read on this engine, reached $454 million in the quarter, up 26% year over year, at a margin of 42.4%. A business that converts more than forty cents of every fee dollar into earnings, and grows that fee dollar at better than twenty percent, is the structural reason the stock trades where it does.

The moat is the firm's orientation toward private credit, which is also where the capital is flowing. Ares describes its "credit orientation" as "a central tenet of our business across our debt and equity investment strategies," and the segment math reflects it: the 10-K lays out the Credit Group's fee-related earnings as the largest single source of the firm's economics, with Credit roughly seventy percent of the business by weight, Real Assets near a fifth, and Secondaries and Private Equity the remainder. The 10-K describes the advantage as "the combination of high-quality proprietary information flow" feeding its underwriting. The point is not that any one fund wins; it is that a lender with scale, deal flow, and a long memory of credit cycles can keep deploying capital that banks have pulled back from, and charge a fee for the privilege of doing it.

The fundraising machine is what turns all of this into a forward story rather than a snapshot. Q1 2026 brought a record $30 billion of new commitments, up 46% from a year earlier, lifting assets under management to $644 billion and fee-paying assets to $400 billion. Available capital stood at $158 billion, capital that has been raised, carries fees, and is waiting to be deployed into future fee-paying assets. The bull case is not that Ares is cheap. It plainly is not. The bull case is that a fee engine growing this fast, this profitably, with a backlog of capital this large, is a rare kind of compounding, and the price is paying for the compounding rather than the current earnings.

Bear Case

Start with what the headline earnings number hides. A large share of Ares's reported GAAP earnings is attributable to interests other than the common shareholder, which is why the price-to-earnings figure looks so extreme and why a raw earnings yield understates how the business actually pays its owners. The bear case is not that the company is failing. It is that the price has already paid for years of success that has not happened yet, and the cushion if that success comes slightly slower is thin.

That is where the multiple becomes the argument. At roughly 95 times earnings the stock carries the highest price-to-earnings in its fee-financial peer group, against names like BlackRock, Janus Henderson, and Houlihan Lokey. The valuation methods that lean on what the firm has demonstrated, rather than what it might grow into, land far below the price: the book-value-plus-profitability approaches put the equity near $19 to $22 a share against a book value of about $26.69 and a trailing return on equity of 7.5%, and a sector revenue-multiple read lands near $57. Only the cash-flow projection that credits years of high growth reaches today's price. Read plainly, the static methods say richly valued and the price is a bet that the fee engine keeps compounding at its recent pace. Historically only about one in nine fee firms growing earnings this fast sustained that pace for a decade. The price assumes Ares is the exception.

The firm's own filings name where the fragility lives. The second leg of profit, carried interest, is performance-dependent and uneven: Ares discloses that this income "varies with the life cycle of our funds," rising in harvesting periods and thinning otherwise, so the realized-income line that supports the dividend is lumpier than the fee line. And the fee line itself rests on fundraising in a crowded market. Ares warns that "some of our competitors may have more flexibility" on the pricing, structure, and terms of new funds, and that shifting distribution arrangements in the wealth channel could pressure the fees it collects there. If institutional and private-wealth flows into private credit cool, or if fee rates compress as larger rivals undercut on terms, the single number the whole price rests on stops growing at twenty percent, and a 95-times multiple does not survive that gently.

Valuation

The cleanest way to read Ares is to ask what the price is buying, because it is plainly not buying current earnings. A capital-light fee business is worth the stream of fee earnings it throws off, not its accounting net worth, so the relevant lens is the price of those earnings. At about 95 times earnings, a 1.1% earnings yield, the price assumes the firm sustains and keeps growing its fee economics for a long time. The inversion does not resolve to a single tidy growth-and-duration figure here, because a material part of GAAP earnings accrues to fund investors rather than to the common share, so the honest statement is qualitative: the price leans on continued fee-engine compounding at something close to the firm's recent pace.

The methods disagree in a revealing pattern. Group them into families and only one reaches the price. The asset-value family, which anchors on book value and current profitability, sits far below, around $19 to $22 a share against a book value near $26.69 and a 7.5% trailing return on equity. The peer-multiple family, using a sector revenue multiple, lands near $57. The forward-growth family is the only one that touches today's level: a cash-flow projection that credits high growth reaches about $252, and a future-market-cap model holding the current revenue multiple flat reaches about $188. That spread is the premium. When every backward-looking method says richly valued and only the growth methods reach the price, the price is a durability bet, an underwriting of compounding that the static frames structurally cannot price.

Against the fee-financial cohort, Ares sits at the top of the range on price-to-earnings rather than mid-pack, which is the concrete cost of the bet. The balance-sheet lenses that would normally bound the downside do not resolve cleanly from the filings for a fee business of this structure, where operating-income and debt concepts are reported differently than for an operating company, so the more useful downside check is the durability of the fee stream itself. The whole valuation reduces to a single question the buyer is answering with their entry price: will record fundraising and a $158 billion pile of available capital keep the fee line compounding fast enough to grow into 95 times earnings, when only about one fee firm in nine has historically sustained that growth for a decade.

Catalysts

The first quarter of 2026 set the tone the stock is trading on. Ares reported management fees above $1 billion for the first time, up 22% year over year, fee-related earnings of $454 million up 26% at a 42.4% margin, and realized income of $503 million up 24%, with after-tax realized income per share of $1.24. Assets under management rose 18% to $644 billion and fee-paying assets rose 19% to $400 billion. The dividend was raised to $1.35 per share, more than 20% above the prior-year quarter, payable June 30, 2026.

The forward catalyst is fundraising momentum and how durably it holds. The quarter brought a record $30 billion of new capital, up 46% from a year earlier, led by institutional demand across credit, real estate, and secondaries, lifting available capital to $158 billion. Management has framed longer-term targets of 16% to 20% compound annual growth in fee-related earnings, 20% to 25% in realized income, and roughly 20% in the dividend. Those targets are the bar the next several quarters will be measured against; the next earnings print is the cleanest test of whether the fee line keeps compounding at the pace the price requires.

Peer Cohorts (Per Segment, With Filing Citations)

Credit Group / Real Assets Group (reported)

Secondaries Group (reported)

Private Equity Group (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 FY2026 earnings release · Q1 FY2026 earnings call

View the full interactive ARES report on boothcheck