ULS Group (3798) AI Stock Analysis

• Market Cap: ¥31.58B
• Dividend Yield: 0.94%
• Average Volume (3M): 232.20K
• Price to Earnings (P/E): 14.7
• Beta (1Y): 0.78
• 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: 63,853,000
• 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: ¥561.00 ▼(-28.08% 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, conservative balance sheet materially lowers financial distress risk and preserves strategic optionality. Over months this supports capital allocation flexibility for R&D, selective M&A or buybacks, and protects operations in downturns without relying on external financing.

Strong revenue scaling and profitability

Sustained revenue growth coupled with high gross and operating margins indicates durable product-market fit and efficient cost structure. This combination improves reinvestment capacity, supports stable returns on equity, and underpins multi-quarter competitiveness and margin-supported cash generation.

Consistently positive free cash flow

Persistent positive free cash flow provides a durable internal funding source for capital expenditures, share returns, and working capital needs. Over a 2-6 month horizon this strengthens financial flexibility and reduces reliance on new capital during normal business cycles.

Negative Factors

Weak operating cash conversion

A persistent gap between net income and operating cash flow signals working-capital or timing pressures that can erode liquidity. Structurally, weaker cash conversion limits reinvestment capacity, raises funding uncertainty for initiatives, and increases sensitivity to cyclical swings.

Margin variability

Fluctuating margins suggest the business is exposed to cost, pricing, or mix volatility. Over months this complicates forecasting, can compress returns during adverse periods, and raises the risk that profitability may prove less predictable despite revenue growth.

Limited growth optionality from zero leverage

While conservative, an absence of leverage means the company may underutilize low-cost capital to accelerate expansion or finance larger deals. Structurally this can slow scaling or M&A cadence versus peers that use moderate debt to amplify returns.

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.

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	2.90B	2.72B	1.85B	1.80B	1.66B	1.46B
Net Income	1.75B	1.64B	1.13B	1.23B	998.56M	891.98M
Balance Sheet
Total Assets	12.84B	13.60B	11.04B	9.59B	8.80B	8.02B
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	3.12B	2.19B	1.82B	1.60B	1.70B
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	686.87M	514.42M	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: 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 Negative. The current price of 780 is above the 20-day moving average (MA) of 534.40, above the 50-day MA of 570.30, and above the 200-day MA of 661.68, indicating a bearish trend. The MACD of -13.71 indicates Negative momentum. The RSI at 45.48 is Neutral, neither overbought nor oversold. The STOCH value of 20.96 is Neutral, 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
4396	76 Outperform	¥22.82B	11.39	―	1.70%	22.25%	31.88%
3798	75 Outperform	¥31.58B	14.65	17.18%	0.94%	27.67%	12.47%
3393	74 Outperform	¥26.98B	11.13	―	4.36%	12.32%	10.42%
4072	73 Outperform	¥30.58B	13.32	―	2.22%	9.57%	315.38%
3916	72 Outperform	¥29.46B	16.05	―	2.45%	19.04%	30.67%
4725	65 Neutral	¥30.97B	10.75	10.34%	4.82%	-3.03%	38.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%