ULS Group (3798) AI Stock Analysis

• Market Cap: ¥35.31B
• Dividend Yield: 0.94%
• Average Volume (3M): 232.20K
• Price to Earnings (P/E): 16.7
• Beta (1Y): 0.77
• Revenue Growth: 27.67%
• EPS Growth: 12.47%
• Country: JP
• Employees: 672
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 11.66
• Shares Outstanding: 63,849,000
• 10 Day Avg. Volume: 273,430
• 30 Day Avg. Volume: 232,200
• PEG Ratio: 0.38
• Price to Book (P/B): 2.73
• Price to Sales (P/S): 2.11
• P/FCF Ratio: 18.59
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 37.01
• Revenue Forecast (FY): ¥16.46B

• Rating: 75 Outperform
• Price Target: ¥628.00 ▼(-19.49% Downside)
• Action: Reiterated Date: 12/30/25
• Date: Action: Reiterated 12/30/25

The score is driven primarily by strong financial quality (high profitability and a debt-free balance sheet), partially tempered by less consistent recent operating cash generation. Technicals are supportive with positive momentum, while valuation is only average due to a moderate P/E and low dividend yield.

Positive Factors

Debt-free balance sheet

A zero-debt capital structure materially lowers financial risk and preserves strategic optionality over the medium term. It supports resilience to downturns, enables opportunistic investment or M&A without refinancing risk, and gives management flexibility to prioritize organic growth or shareholder returns.

Revenue scaling with high profitability

Sustained revenue scaling combined with robust gross and operating margins indicates durable business economics. This supports predictable reinvestment capacity, strengthens competitive positioning through margin-funded initiatives, and underpins long-term earnings power and return generation.

Consistent positive free cash flow

Regular positive free cash flow that broadly follows reported earnings demonstrates underlying earnings quality and internal funding ability. Over 2–6 months this supports capital expenditures, selective buybacks or dividends, and reduces near-term dependence on external capital markets.

Negative Factors

Operating cash generation lag

When operating cash lags reported earnings, cash available for reinvestment and distributions is less reliable. Persistent working-capital or timing gaps can constrain execution of growth projects, force postponement of capital allocation plans, or require equity financing, raising execution risk.

Margin variability

Observed margin swings reduce predictability of profitability and free cash flow. Even with revenue growth, cyclical or operational margin pressure can compress earnings in adverse periods, complicating budgeting and potentially weakening investor confidence in sustained margin levels.

Limited leverage constrains upside

While conservative, an all-equity funding approach can limit the pace of scale and reduce return amplification from judicious debt use. In scenarios where faster expansion or larger acquisitions are value-accretive, lack of leverage may force slower scaling or dilute returns via additional equity issuance.

ULS Group Business Overview & Revenue Model

Company Description

ULS Group (3798) is a Japanese company that operates in the IT services sector, providing a range of technology solutions, including system integration, consulting, and software development services. The company primarily focuses on delivering cutting-edge IT solutions to businesses across various industries, leveraging advanced technologies to enhance operational efficiency and drive digital transformation.

How the Company Makes Money

ULS Group generates revenue through multiple streams, primarily from its IT services and solutions offerings. The company earns money by providing system integration services, which involve designing and implementing complex IT systems tailored to client needs. Consulting services also contribute to revenue, where ULS Group offers strategic advice and expertise to assist businesses in optimizing their IT infrastructure. Additionally, the company develops custom software applications for clients, further contributing to its income. Significant partnerships with technology providers and enterprise clients bolster its revenue, enabling ULS Group to access a broader market and offer comprehensive solutions.

ULS Group Financial Statement Overview

Summary

Strong overall fundamentals: solid revenue scaling and consistently high profitability, supported by an exceptionally conservative, debt-free balance sheet. The main offset is cash flow consistency—operating cash generation has been relatively weak versus net income in recent years, creating potential volatility despite strong reported earnings.

Income Statement

Revenue has scaled strongly over the period, with the latest year showing solid growth (2025 vs. 2024) after a slower 2024. Profitability is consistently high for the sector, with healthy gross and operating margins and a strong operating profit profile. The main weakness is some margin variability (net margin dipped in 2024 before rebounding in 2025), suggesting earnings can fluctuate even as revenue grows.

Balance Sheet

The balance sheet is very conservative with no debt reported across all periods, which materially lowers financial risk and adds flexibility. Equity has grown steadily alongside the business, and returns on equity are consistently healthy, indicating effective capital use. The key drawback is that with zero leverage, growth is funded primarily through equity and internal cash generation, which can limit upside in certain environments (though it reduces downside risk).

Cash Flow

Free cash flow is consistently positive and generally tracks net income well, indicating earnings quality is solid and cash conversion is good. However, operating cash flow is relatively low versus net income in recent years (notably 2024–2025), pointing to working-capital or timing headwinds that can create volatility. Free cash flow growth is also uneven (including a sharp drop in 2022), which slightly reduces confidence in near-term cash flow stability.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	14.16B	13.20B	10.38B	8.52B	7.37B	7.19B
Gross Profit	5.68B	5.32B	3.86B	3.36B	2.93B	2.56B
EBITDA	2.89B	2.73B	1.85B	1.99B	1.66B	1.47B
Net Income	1.75B	1.64B	1.13B	1.23B	998.56M	891.98M
Balance Sheet
Total Assets	12.84B	13.57B	11.01B	9.56B	8.78B	8.00B
Cash, Cash Equivalents and Short-Term Investments	8.02B	7.14B	6.02B	5.60B	5.47B	5.16B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	2.07B	3.09B	2.17B	1.79B	1.58B	1.67B
Stockholders Equity	10.47B	10.18B	8.60B	7.57B	7.02B	6.18B
Cash Flow
Free Cash Flow	0.00	1.50B	692.00M	684.67M	508.33M	1.01B
Operating Cash Flow	0.00	1.59B	756.00M	837.24M	568.39M	1.06B
Investing Cash Flow	0.00	-222.00M	-98.00M	45.11M	-85.85M	942.00K
Financing Cash Flow	0.00	-249.00M	-239.00M	-752.42M	-169.67M	-321.10M

ULS Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 780.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3798, the sentiment is Neutral. The current price of 780 is above the 20-day moving average (MA) of 546.95, above the 50-day MA of 606.50, and above the 200-day MA of 664.00, indicating a neutral trend. The MACD of -13.56 indicates Negative momentum. The RSI at 48.26 is Neutral, neither overbought nor oversold. The STOCH value of 51.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3798.

ULS Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4396	76 Outperform	¥27.04B	16.07	―	1.70%	22.25%	31.88%
3798	75 Outperform	¥35.31B	16.67	16.37%	0.94%	27.67%	12.47%
3393	74 Outperform	¥30.63B	13.84	―	4.36%	12.32%	10.42%
4072	73 Outperform	¥33.63B	11.50	―	2.22%	9.57%	315.38%
3916	72 Outperform	¥32.38B	14.25	―	2.45%	19.04%	30.67%
4725	65 Neutral	¥32.65B	10.11	10.34%	4.82%	-3.03%	38.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%