UL Solutions Inc. Class A (ULS) AI Stock Analysis

• Market Cap: $11.51B
• Dividend Yield: 0.88%
• Average Volume (3M): 1.01M
• Price to Earnings (P/E): 35.3
• Beta (1Y): 0.64
• Revenue Growth: 7.17%
• EPS Growth: 25.35%
• Country: US
• Employees: 14,813
• Sector: General
• Sector Strength: N/A
• Industry: Specialty Business Services
• EPS (TTM): 1.63
• Shares Outstanding: 62,049,274
• 10 Day Avg. Volume: 1,615,821
• 30 Day Avg. Volume: 1,011,843
• PEG Ratio: 1.39
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.73
• Price to Cash Flow (P/CF): 20.60
• P/FCF Ratio: 20.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $60.50
• Price Target Upside: 5.24% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

UL Solutions Inc. shows a strong financial position with notable revenue and profitability growth, supported by strategic initiatives and expansions. Despite strong financials, the stock's high valuation and potential external headwinds, such as tariffs and currency fluctuations, present risks. Technical indicators suggest moderate strength, while the new executive appointment is seen as a positive strategic move.

Positive Factors

Business Strategy

The company continues to capitalize on the longer-term mega trends with broad-based growth across all business lines.

Earnings

Fourth-quarter results came in nicely above expectations, with top-line upside driving adjusted EBITDA margin and EPS above estimates.

Financial Performance

ULS reported strong results, beating consensus estimates across the board as organic growth was robust in both their Industrial and Consumer segments.

Negative Factors

Margin Pressure

Management increased guidance on revenue but expects margin to be pressured by expenses to support growth, yet margins are poised to improve due to mix shift, lab investments, and robust organic growth.

Revenue Expectations

Software & Advisory falls light. Segment revenue was $93M, +2.2% organically and light of management/our expectations on lower advisory work, but better software trends.

Stock Performance

Shares trended modestly lower, attributed to heightened investor expectations and management's view that fourth-quarter results benefited from a pull-forward in demand ahead of looming tariff actions.

UL Solutions Inc. Class A Business Overview & Revenue Model

Company Description

UL Solutions Inc. provides safety science services worldwide. It operates through three segments: Industrial, Consumer, and Software and Advisory. The Industrial segment provides testing, inspection, and certification services across various end markets, including energy, industrial automation, engineered materials, and built environment, as well as stakeholders, such as manufacturers, building owners, end users, and regulators. The Consumer segment offers safety certification testing, ongoing certification, global market access, testing for connectivity, performance and quality, and critical systems advisory and training services, as well as product market acceptance and risk mitigation services for customers in the consumer products end markets comprising consumer electronics, medical devices, information technologies, appliances, HVAC, lighting, and retail, as well as consumer applications, such as new mobility, smart products, and 5G. The Software and Advisory segment provide software and technical advisory services that enable customers to manage regulatory requirements, deliver supply chain transparency, and operationalize sustainability for regulated industries, including life sciences, supply chain regulations, transparency needs, and new ESG and sustainability requirements. It offers ULTRUS software brand to help customers improve speed to market, sustainability and safety. UL Solutions Inc. was formerly known as UL Inc. and changed its name to UL Solutions Inc. in June 2022. The company was founded in 1894 and is headquartered in Northbrook, Illinois with additional offices in North America, Asia Pacific, Africa, Europe, Latin America, and Middle East. UL Solutions Inc. operates as a subsidiary of ULSE Inc.

How the Company Makes Money

UL Solutions Inc. makes money primarily through its testing, inspection, and certification services. The company charges fees for evaluating products against safety and regulatory standards, which is essential for manufacturers to gain market access in various regions. Key revenue streams include product testing services, certification, and inspection fees. Additionally, UL Solutions generates income through training and advisory services, helping companies navigate complex compliance landscapes. Strategic partnerships with industry leaders and government agencies enhance its service offerings and expand its market reach, contributing to its earnings.

UL Solutions Inc. Class A Financial Statement Overview

Summary

UL Solutions Inc. demonstrates strong financial performance with growth in revenue and profitability, effective cost management, and robust cash flow generation. The stable leverage and improved return on equity are positive, but increased debt levels should be monitored.

Income Statement

UL Solutions Inc. has shown solid growth in revenue with a notable increase from $2.678 billion in 2023 to $2.87 billion in 2024. The gross profit margin improved to 48.5% in 2024, indicating efficient cost management. Net profit margin increased to 11.4%, reflecting stronger profitability. The EBIT and EBITDA margins also showed improvement, indicating operational efficiency. Overall, the income statement highlights a positive growth trajectory and improved profitability.

Balance Sheet

The company's balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.03, indicating moderate leverage. The equity ratio of 32.3% suggests a balanced capital structure. Return on equity improved significantly to 36.1%, showcasing effective use of shareholders' equity to generate profit. Although the balance sheet is stable, the increase in total debt warrants attention for potential risk management.

Cash Flow

Cash flow analysis shows healthy free cash flow growth from $252 million in 2023 to $287 million in 2024. The operating cash flow to net income ratio is strong at 1.61, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is 0.88, suggesting effective conversion of earnings into free cash flow. The company demonstrates robust cash flow management, supporting its operational and strategic initiatives.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.87B	2.68B	2.52B	2.52B	2.30B
	Gross Profit
1.39B	1.28B	1.21B	1.18B	1.03B
	EBIT
462.00M	368.00M	412.00M	287.00M	363.00M
	EBITDA
462.00M	535.00M	535.00M	417.00M	481.00M
	Net Income Common Stockholders
326.00M	260.00M	293.00M	224.00M	231.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
298.00M	315.00M	373.00M	1.38B	971.00M
	Total Assets
2.80B	2.74B	2.72B	3.66B	3.55B
	Total Debt
935.00M	1.06B	660.00M	154.00M	119.00M
	Net Debt
637.00M	748.00M	338.00M	-1.17B	-852.00M
	Total Liabilities
1.87B	2.06B	1.64B	1.33B	1.28B
	Stockholders Equity
904.00M	654.00M	1.05B	2.31B	2.25B
Cash Flow		Free Cash Flow
287.00M	252.00M	208.00M	314.00M	368.00M
	Operating Cash Flow
524.00M	467.00M	372.00M	421.00M	487.00M
	Investing Cash Flow
-234.00M	-175.00M	-238.00M	178.00M	-344.00M
	Financing Cash Flow
-284.00M	-294.00M	-1.12B	-228.00M	-20.00M

UL Solutions Inc. Class A Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 57.49
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ULS, the sentiment is Positive. The current price of 57.49 is above the 20-day moving average (MA) of 55.36, above the 50-day MA of 54.19, and above the 200-day MA of 51.19, indicating a bullish trend. The MACD of 0.83 indicates Negative momentum. The RSI at 62.46 is Neutral, neither overbought nor oversold. The STOCH value of 89.29 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ULS.

UL Solutions Inc. Class A Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	79 Outperform	$3.13B	21.76	7.17%	0.78%	5.04%	31.69%
RTO	71 Outperform	$11.18B	28.80	7.44%	2.28%	3.96%	-17.48%
ULS	71 Outperform	$11.51B	35.30	41.85%	0.88%	7.17%	25.35%
CBZ	69 Neutral	$4.31B	73.27	3.19%	―	13.97%	-54.48%
ABM	66 Neutral	$2.92B	37.03	4.46%	2.00%	2.81%	-67.57%
ARMK	60 Neutral	$8.66B	25.74	11.46%	1.21%	-5.98%	-46.55%
Sector *	55 Neutral	$4.02B	-11.16	-12.81%	5.53%	21.89%	-64.83%

UL Solutions Inc. Class A Corporate Events

UL Solutions Inc. Announces Board of Directors Changes

On February 11, 2025, UL Solutions Inc. announced changes to its board of directors, with Lisa Lambert deciding not to stand for re-election and Frank Coyne not being nominated due to the board’s retirement policy. The company intends to nominate Vikram Kini, CFO of Ingersoll Rand Inc., for election to the board. These changes will reduce the board size from 13 to 12 members, as decided by the board.