Ares Management (ARES) is back in focus after first quarter 2026 results showed revenue of US$1,396.44 million and net income of US$142.59 million, along with record assets under management and higher fee related earnings.

Ares Management’s share price has surged 23.09% over the past month, but is still down 25.65% year to date, while the 5 year total shareholder return of 179.29% points to strong longer term momentum.

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With fee-related earnings rising 26%, assets under management at US$644.3b, and the stock still down sharply for the year, investors now have to decide: is Ares undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 28% Undervalued

The most followed narrative pegs Ares Management's fair value at $170.59, well above the last close of $123.66, which sets up a clear valuation gap for investors to assess.

High levels of un-deployed capital (dry powder) and a record investment pipeline position Ares to quickly convert AUM not yet paying fees into fee-generating assets, accelerating management fee and net earnings growth over the next 12-18 months.

Read the complete narrative. Read the complete narrative.

Curious what kind of earnings curve and margin profile underpin that valuation gap? The narrative leans heavily on faster profit growth than revenue, plus a richer future earnings multiple. The full story connects those assumptions directly to Ares' fee engine and capital base.

Result: Fair Value of $170.59 (UNDERVALUED)

However, heavier competition and potential fee pressure in private credit, along with any pullback in retail flows, could quickly challenge the case for a valuation gap.

Another View: What The P/E Ratio Is Saying

The fair value narrative points to Ares as 28% undervalued, but the current P/E of 49.7x tells a different story. That is higher than the US Capital Markets industry at 41.1x, the peer average at 18.5x, and above the fair ratio of 21.8x that the market could move toward.

This kind of gap increases the risk that any stumble in earnings or sentiment hits the share price harder than expected. The key question is whether you think Ares can grow into this valuation, or whether the multiple itself becomes the pressure point.

Next Steps

If this mix of optimism and concern feels familiar, use it as a prompt to look at the underlying data yourself and decide where you stand. To help with that, start by weighing the stock's 2 key rewards and 3 important warning signs

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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.