Ares Management Q3 Earnings Preview: Can A $114B Secret Weapon Save The Stock on Oct. 29?
Ares Management heads into its October 29 earnings report with analyst estimates sliding for three straight months and shares sitting near a 52-week low, yet the firm is sitting on a massive pool of capital that has not started generating…
Ares Management (NYSE:ARES | ARES Price Prediction) reports third-quarter results on Thursday, Oct. 29. The stock is down 21.9% year to date and analysts keep cutting estimates. The key question is whether $114 billion of AUM not yet paying fees starts turning into revenue.
Record Inflows Collide With Shrinking Expectations
Last quarter, Ares earned $1.29 per share against a $1.27 estimate. Revenue of $1.43 billion beat the $1.14 billion consensus. The firm raised a record $36.4 billion, AUM rose 17% to $671.3 billion, and fee-related earnings (FRE) climbed 20% to $491.1 million on a 42.2% margin.
Shares hit $143.17 within 30 days of that report, then fell back to $122.07. That leaves the stock roughly 33% to 34% below its 52-week high. Since then, Q3 EPS consensus has fell from $1.4214 90 days ago to $1.2569, with six downward revisions and no upward ones over the past 30 days.
Consensus Estimates Heading Into Oct. 29
| Metric | Consensus | Year-Ago Actual | YoY Change |
|---|---|---|---|
| Q3 2026 EPS | $1.2569 | $1.19 | +5.6% |
| Q3 2026 Revenue | $1.236 billion | $1.66 billion | -25.5% |
| FY 2026 EPS | $5.7605 | $4.76 | +21.0% |
| FY 2026 Revenue | $4.934 billion | $5.60 billion | -11.9% |
That revenue decline reflects a tough comparison. Last year’s Q3 revenue beat estimates by 54.73%.
Fee Conversion and Deployment Speed Will Decide This Quarter
Of the $114 billion not yet paying fees, about $93 billion was available for deployment. Together with development assets that haven’t stabilized yet, management says it could generate roughly $828 million in additional annual management fees. Ares also holds a record $170 billion of dry powder.
The pipeline looked strong in July. CEO Michael Arougheti said signed NDAs rose about 35% quarter over quarter, adding that “sponsor activity is picking up dramatically as we head into the back half of the year.” I want to see that pipeline show up in fee-paying AUM, which was near $410 billion.
Recurring fees will carry most of the quarter. Management guided to only about $10 million of realized net performance income, and the effective fee rate fell to 0.97% from 1.00%. You should also check the wealth channel. The non-traded BDC redemption queue fell from about $1.2 billion to a little over $600 million.
New deals give management plenty to talk about. Ares set up a €1.5 billion European logistics partnership with Norges Bank Investment Management and agreed to buy Infinity Transportation for $2.9 billion. Pathfinder III closed at $8.5 billion, beating its $6.5 billion target.
Fee Growth Has to Outpace the Estimate Cuts
Full-year consensus still calls for 21.0% EPS growth. Management says it is tracking toward the upper end of its 0 to 150 basis point margin improvement target. If Ares shows that record fundraising is turning into fee-paying assets, it gets a credible answer to three months of downgrades. The $114 billion pool now has to start making fees.
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