Ares Management Corp is an alternative asset manager that originates, invests and manages private capital across credit, real assets and private equity, with a financial profile marked by strong cash generation and multi‑year compounding in per‑share results alongside notable earnings volatility and compressed near‑term liquidity.
The company demonstrates material long‑term growth and cash‑quality attributes: 17.07% 5‑year diluted EPS CAGR and 27.60% 5‑year book‑value‑per‑share CAGR, with a 86.59% 3‑year EPS CAGR. Operating cash flow on a trailing‑twelve‑month basis was $3.27B versus reported net income of $1.09B at 2025‑12‑31, and the firm’s operating cash flow exceeds net income by roughly 3.0x (cash conversion ratio ~4.51), underscoring high earnings quality and strong cash conversion (Earnings Quality Analysis; EPS Diluted & Revenue per Share).
Areas of concern include liquidity and uneven returns: the reported current ratio is 0.1897, indicating limited short‑term liquid coverage, and ROE momentum has weakened with ROE falling from 25.1% at 2023‑12‑31 to 12.5% at 2025‑12‑31 and ROE growth registering −4.42% recently (Return on Equity (ROE); Profit Margin Trends). Reported net income shows large quarter‑to‑quarter swings (for example, $904.1M at 2025‑12‑31 versus $142.6M at 2026‑03‑31), which produces volatile periodic EPS and complicates near‑term comparability (Revenue & Net Income; Revenue & EPS Growth).
The foundation of business quality and long-term value creation
Ares Management Corp's recent net income series shows marked variability with a pronounced fourth-quarter spike. Net income rose from $47.2M in 2025-03-31 to $137.1M in 2025-06-30, then jumped to $904.1M on 2025-12-31 before declining to $142.6M in 2026-03-31. Prior year-end results were also elevated ($463.7M at 2024-12-31 and $474.3M at 2023-12-31), versus mid‑year and earlier periods, indicating intermittent large quarterly swings in reported net income.
Revenue observations are sparser in the recent sample but show a mid‑range quarterly level in the most recent reported quarter: $542.2M at 2025-09-30. Historical revenue points include $948.7M at 2021-09-30 and several quarters in the $300–$480M range; there is also a negative revenue entry of -$1.28B at 2019-12-31 in the dataset. The most recent net income was $142.6M (period end 2026-03-31). The most recent revenue observation was $542.2M (period end 2025-09-30).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2019 to Dec 2019, Ares Management Corp generates $0.05B in revenue. The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Jan 2019 to Dec 2019
Analyzing long-term margin stability and competitive positioning
The dataset for Ares Management Corp contains only a single trailing‑twelve‑month observation for Net Profit Margin dated 2014-12-31. No time series for gross margin or operating margin is present in the provided data, and with only one net margin data point no trend or inflection points can be identified.
The current reported net profit margin level is 5.8% as of 2014-12-31. The most recent values: Gross Margin — not provided; Operating Margin — not provided; Net Profit Margin — 5.8%.
Understanding Profit Margins
Between Jan 2019 and Dec 2019, Ares Management Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Ares Management Corp's trailing-twelve-month net income has accelerated over the most recent periods, rising from $463.7M at the 2024-12-31 TTM to $1.09B at 2025-12-31 and then to $1.18B at 2026-03-31. Operating cash flow on a TTM basis also increased year-over-year, moving from $2.79B at 2024-12-31 to $3.27B at 2025-12-31. The most notable inflection is the sharp rise in reported net income between the 2024 and 2025 TTMs alongside a continued elevated level of operating cash flow.
Across the recent TTMs, operating cash flow has exceeded net income by a wide margin— for example, $3.27B vs $1.09B at 2025-12-31— indicating a persistent positive gap between cash generation and reported earnings in the latest periods. The most recent trailing twelve-month net income was $1.18B (period ended 2026-03-31). The most recent trailing twelve-month operating cash flow was $3.27B (period ended 2025-12-31).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Ares Management Corp's ROE has moderated over the last two reported years after a higher reading in 2023. ROE fell from 25.1% at 2023-12-31 to 13.1% at 2024-12-31 and then to 12.5% at 2025-12-31, indicating a downward move and recent stabilization in the low-teens.
Looking further back, the series shows pronounced volatility: an extreme negative ROE of -78.7% at 2015-03-31, a recovery to 7.8% by 2015-12-31, peaks in 2016–2017 (38.2% at 2016-12-31, 44.5% at 2017-06-30, 27.7% at 2017-12-31), and a trough of 3.4% at 2022-12-31 prior to the 2023 rebound. The most recent ROE was 12.5% for the period ending 2025-12-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Ares Management Corp’s operating cash flow on a trailing twelve‑month basis strengthened in the most recent period, rising from $2.79B at 2024‑12‑31 to $3.27B at 2025‑12‑31, indicating an upward trend in cash generated from operations year over year.
Investing cash flows have been consistently negative in recent annual TTMs, moving from −$111.1M at 2023‑12‑31 to −$159.4M at 2024‑12‑31, reflecting a modest increase in net investing outflows over that interval.
Financing cash flow shows a notable inflection: it was a net inflow of $292.1M at 2023‑12‑31 and shifted to a net outflow of −$1.43B at 2024‑12‑31, representing a material move toward negative financing cash flow in the latest full-year observation.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Ares Management Corp's Price-to-Earnings (PE) ratio has contracted sharply over the most recent reported periods. After readings of 83.0x at 2024-12-31 and 32.3x at 2025-12-31, the ratio fell further to 20.0x at 2026-03-31, showing a pronounced decline in the last year and quarter.
Historically the PE series was elevated and volatile, with notable peaks at 145.0x in 2015 and 106.5x in 2014, and other high points of 88.7x in 2022 and 83.0x in 2024; intermediate readings included 52.9x in 2023 and 43.2x in 2021. The most recent Price-to-Earnings (PE) ratio for Ares Management Corp was 20.0x (period end 2026-03-31).
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.