Ares Management (ARES) is in focus after partnering with The Scion Group in a joint venture to acquire a 12 property, 7,578 bed student housing portfolio for about US$910 million.

The Ares Management share price has risen 8.6% over the past 90 days, including an 8.0% 30 day share price return, yet is still down 25.2% year to date, while the 5 year total shareholder return of 163.1% points to strong longer term performance momentum.

If deals like the Scion joint venture have you thinking about where capital is flowing next, it can be useful to compare with other opportunities using a focused stock screener such as 20 top founder-led companies

So with Ares shares rebounding in recent months but still well below where they started the year, is the stock now trading at an appealing discount, or is the market already pricing in the company’s next phase of growth?

Most Popular Narrative: 27.1% Undervalued

Ares Management's most followed narrative pegs fair value at $170.59 versus the last close of $124.41, framing the recent share price weakness in a very different light.

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.

Want to see what is behind that confidence in recurring fees and profitability? The narrative highlights faster earnings growth, richer margins and a premium future earnings multiple.

Result: Fair Value of $170.59 (UNDERVALUED)

However, this depends on private credit sentiment and fee levels holding up. Competitive fee pressure or sustained retail outflows could quickly challenge that undervalued thesis.

Another Angle on Valuation

That 27.1% “undervalued” narrative sits awkwardly beside the current P/E of 50x, compared with 40.1x for the US Capital Markets industry, 18.2x for peers, and a fair ratio of 21.7x. If the market gravitated toward that fair ratio, how comfortable would you be with the downside risk?

Next Steps

With sentiment clearly split between opportunity and risk, now is the time to look through the data yourself and decide where you stand. To help you weigh both sides of the story, take a closer look at the 2 key rewards and 3 important warning signs

Looking for more investment ideas?

If you stop with just one stock, you risk missing other opportunities that might fit your goals even better, so broaden your search before making your next move.

• Spot potential bargains early by scanning for companies that combine quality fundamentals with attractive pricing using the screener containing 21 high quality undiscovered gems.
• Strengthen your downside protection by focusing on businesses with healthier finances through the solid balance sheet and fundamentals stocks screener (46 results).
• Build a more resilient portfolio by filtering for companies with lower risk profiles using the 67 resilient stocks with low risk scores.

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.