ULS Group (3798) AI Stock Analysis

• Market Cap: ¥35.42B
• Dividend Yield: 0.94%
• Average Volume (3M): 232.20K
• Price to Earnings (P/E): 18.2
• Beta (1Y): 0.92
• Revenue Growth: 27.67%
• EPS Growth: 12.47%
• Country: JP
• Employees: 672
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 6.83
• Shares Outstanding: 63,823,000
• 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): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: ¥641.00 ▼(-17.82% Downside)

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 debt-free balance sheet materially lowers financial risk and preserves strategic optionality. Over a multi-month horizon this enhances resilience to demand shocks, enables opportunistic M&A or buybacks without financing strain, and reduces fixed interest costs, supporting durable capital allocation flexibility.

Strong revenue scaling

Sustained revenue scaling, including a notable rebound, signals durable market demand and effective go-to-market execution. Over 2–6 months this should support operating leverage, justify incremental investment in services, and provide a firmer base for predictable top-line expansion and longer-term planning.

High and consistent profitability

Consistently strong gross and operating margins create a durable earnings engine and competitive advantage in services. Robust profitability supports reinvestment in R&D and talent, funds capital expenditures internally, and cushions returns even if cash conversion varies across quarters.

Negative Factors

Weak operating cash generation

Operating cash flow lagging reported earnings creates structural risk to funding internal growth, dividends, or acquisitions without changing working-capital dynamics. Over months this sensitivity can limit maneuverability and force management to prioritize cash conversion improvements or external financing.

Uneven free cash flow

Volatile free cash flow reduces predictability of internally funded initiatives and raises execution risk for multi-quarter projects. A sharp prior decline indicates potential cyclical or working-capital swings that can constrain reinvestment or require reactive financing if the pattern persists.

Conservative capital structure limits upside

A strictly equity-funded growth strategy lowers downside but can slow scale acceleration versus peers using prudent leverage. Over a medium horizon, limited use of debt may constrain the pace of acquisitions or capacity expansion and temper potential return-on-equity enhancement during growth cycles.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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: Negative
• Last Price: 780.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3798, the sentiment is Negative. The current price of 780 is above the 20-day moving average (MA) of 630.20, above the 50-day MA of 615.76, and above the 200-day MA of 659.85, indicating a bearish trend. The MACD of -19.37 indicates Positive momentum. The RSI at 37.47 is Neutral, neither overbought nor oversold. The STOCH value of 15.20 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3798.

ULS Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4725	77 Outperform	¥33.89B	9.83	10.34%	4.82%	-3.03%	38.83%
3798	75 Outperform	¥35.42B	18.22	16.37%	0.94%	27.67%	12.47%
9600	75 Outperform	¥38.28B	19.28	―	2.27%	7.50%	-3.67%
4709	72 Outperform	¥31.75B	12.93	―	3.40%	12.64%	30.73%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
9742	58 Neutral	¥37.87B	40.42	―	2.77%	-2.93%	-30.16%
4813	46 Neutral	¥23.74B	-3.53	―	―	25.89%	-285.21%