Is Ares Management (ARES) Reasonable Or Stretched After Record Fundraising?
Ares Management has delivered a 131.2% gain over the past 5 years, yet the current valuation checks point to the stock trading at a premium to its intrinsic value estimate. The Excess Returns model and market multiple signals both indicate that Ares Management is pricing in strong expectations after a period of solid long term performance.
- Over the past 5 years, Ares Management has returned 131.2%, which means long term holders have already seen a substantial payoff from owning the stock.
- Recent fundraising momentum in private credit and direct lending can support optimistic earnings expectations. However, any slowdown in deal activity or weaker fee growth may weigh on how sustainable those expectations look.
- Ares Management scores 0 out of 6 on Simply Wall St's broader valuation checks, which suggests the stock is not a clear bargain on traditional metrics such as P/E and price based ratios.
The issue now is whether the current share price of Ares Management already reflects most of the good news, or if there is still room relative to the intrinsic value estimate for further upside.
Find out why Ares Management's -23.0% return over the last year is lagging behind its peers.
Is Ares Management Getting Expensive on Excess Returns?
The Excess Returns model looks at how much profit Ares Management can earn above its cost of equity on each dollar of book value. For Ares Management, the model uses a Book Value of $11.03 per share and a Stable EPS estimate of $6.34 per share, based on weighted future Return on Equity estimates from 4 analysts.
With a Cost of Equity of $2.24 per share, this implies Excess Return of $4.10 per share on an Average Return on Equity of 26.20%. The Stable Book Value input of $24.20 per share, based on future book value estimates, translates into an intrinsic value of about $98 per share. Compared with the current share price, this points to the stock trading roughly 45.8% above that estimate, so on this model Ares Management screens as overvalued.
The record $36b fundraising reported for Q2 2026 helps explain why the market is willing to pay a premium to the Excess Returns valuation today.
Overall, the Excess Returns workup suggests Ares Management stock currently looks overvalued relative to its modeled intrinsic value.
Our Excess Returns analysis suggests Ares Management may be overvalued by 45.8%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.
Does Ares Management Look Pricey on Earnings?
The price-to-earnings (P/E) ratio is a useful way to look at Ares Management because earnings are a key driver for an asset manager with sizeable fee based revenue.
Ares Management currently trades on a P/E of 56.8x, which is well above the Capital Markets industry average of about 37.4x and the peer group average of 37.1x. The Simply Wall St fair P/E, which adjusts for the company’s growth profile, margins, scale and risk, sits at 24.5x. That is less than half of the current trading multiple, so the market is placing a strong premium on Ares Management’s earnings today.
This gap indicates that investors are willing to pay a higher price for each dollar of current earnings in Ares Management compared with both the sector and the modelled fair range.
On this P/E yardstick, Ares Management stock appears overvalued relative to what the tailored fair multiple implies.
See what the numbers say about this price — find out in our valuation breakdown.
The Ares Management Narrative: What Would Justify Today's Price?
Simply Wall St Narratives pick up where the valuation puzzle for Ares Management leaves off, and set out the specific assumptions on growth, margins and earnings that would need to hold for the stock to be worth materially more or less than today’s price on the Community page. Instead of a single ratio or model output, Narratives lay out the future that number relies on so you can watch how Ares Management's actual progress lines up with it over time.
Community views on Ares Management sit far apart, with some investors seeing long runway in its platform while others focus on execution and cost risks.
Bull case: roughly fairly valued
"The significant ramp in perpetual capital, combined with consistent investment performance and low client redemptions, is expected to drive higher recurring fee revenues..."
Read the full Bull Case to see why Ares Management could be undervalued
Bear case: 17% overvalued
"Ares Management is facing increased general and administrative expenses, with G&A expenses rising by over 20%..."
Read the full Bear Case to see why Ares Management could be overvalued
Do you think there's more to the story for Ares Management? Head over to our Community to see what others are saying!
The Bottom Line
Ares Management screens as overvalued on both the Excess Returns intrinsic value estimate and the P/E multiple, so the current price already embeds confident expectations on earnings power and fundraising. The broader valuation checks also sit in the weaker tier, which supports a cautious read on value even though recent business momentum has been strong. From here, the key question is whether Ares Management can keep converting fundraising and deployment into fee earnings that justify a premium multiple, or whether sentiment cools and the valuation settles closer to the intrinsic value range.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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