UL Solutions (NYSE:ULS) Shares Gap Up on Better-Than-Expected Earnings

Key Points

• Beat expectations and big gap up: UL Solutions reported Q-quarter EPS of $0.50 versus $0.42 expected and revenue of $758.0M (up 7.5% YoY vs $748.5M est.), and the stock gapped up from a $90.10 close to a $96.71 open and last traded around $100.74.
• Dividend increase: The company raised its quarterly dividend to $0.145 ($0.58 annualized) for a ~0.6% yield, with a payout ratio of 36.48% and an ex-dividend date of March 2.
• Analysts and insider activity: MarketBeat shows a consensus "Moderate Buy" but an average price target of $88.42 (below the current share price), and CEO Jennifer Scanlon sold 12,500 shares at about $91.57, reducing her stake by 6.23%.

UL Solutions Inc. (NYSE:ULS - Get Free Report) shares gapped up prior to trading on Tuesday following a stronger than expected earnings report. The stock had previously closed at $90.10, but opened at $96.71. UL Solutions shares last traded at $100.74, with a volume of 128,841 shares traded.

The company reported $0.50 earnings per share for the quarter, beating the consensus estimate of $0.42 by $0.08. UL Solutions had a return on equity of 31.62% and a net margin of 10.61%.The business had revenue of $758.00 million during the quarter, compared to analyst estimates of $748.50 million. During the same period in the prior year, the company earned $0.37 earnings per share. UL Solutions's revenue was up 7.5% compared to the same quarter last year.

UL Solutions Increases Dividend

The company also recently disclosed a quarterly dividend, which was paid on Thursday, March 12th. Shareholders of record on Monday, March 2nd were issued a dividend of $0.145 per share. This represents a $0.58 annualized dividend and a yield of 0.6%. This is a positive change from UL Solutions's previous quarterly dividend of $0.13. The ex-dividend date of this dividend was Monday, March 2nd. UL Solutions's dividend payout ratio is currently 36.48%.

Analyst Upgrades and Downgrades

ULS has been the subject of a number of analyst reports. Citigroup cut their price target on UL Solutions from $88.10 to $87.80 and set a "neutral" rating for the company in a report on Tuesday, February 24th. Weiss Ratings lowered UL Solutions from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Friday, February 20th. Robert W. Baird decreased their price objective on UL Solutions from $97.00 to $96.00 and set an "outperform" rating on the stock in a research note on Friday, February 20th. BNP Paribas Exane assumed coverage on UL Solutions in a research note on Monday, April 20th. They set a "neutral" rating and a $95.00 price objective on the stock. Finally, The Goldman Sachs Group reiterated a "neutral" rating on shares of UL Solutions in a research note on Friday, February 20th. One equities research analyst has rated the stock with a Strong Buy rating, four have given a Buy rating and six have issued a Hold rating to the stock. Based on data from MarketBeat, the company currently has an average rating of "Moderate Buy" and an average price target of $88.42.

Insiders Place Their Bets

In other UL Solutions news, CEO Jennifer F. Scanlon sold 12,500 shares of the company's stock in a transaction dated Friday, May 1st. The stock was sold at an average price of $91.57, for a total value of $1,144,625.00. Following the transaction, the chief executive officer directly owned 188,274 shares in the company, valued at $17,240,250.18. This represents a 6.23% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. 1.20% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On UL Solutions

Institutional investors have recently added to or reduced their stakes in the business. TD Private Client Wealth LLC bought a new position in UL Solutions in the 3rd quarter worth about $1,681,000. Allspring Global Investments Holdings LLC increased its stake in UL Solutions by 12.1% in the 4th quarter. Allspring Global Investments Holdings LLC now owns 1,550,913 shares of the company's stock worth $125,484,000 after acquiring an additional 167,564 shares during the last quarter. Envestnet Asset Management Inc. increased its stake in UL Solutions by 405.7% in the 3rd quarter. Envestnet Asset Management Inc. now owns 593,484 shares of the company's stock worth $42,054,000 after acquiring an additional 476,121 shares during the last quarter. Rakuten Investment Management Inc. bought a new position in UL Solutions in the 3rd quarter worth about $1,436,000. Finally, Federated Hermes Inc. increased its stake in UL Solutions by 25.0% in the 3rd quarter. Federated Hermes Inc. now owns 821,596 shares of the company's stock worth $58,218,000 after acquiring an additional 164,396 shares during the last quarter.

UL Solutions Stock Performance

The company has a debt-to-equity ratio of 0.38, a current ratio of 1.32 and a quick ratio of 1.32. The company has a 50 day simple moving average of $85.22 and a 200-day simple moving average of $81.24. The stock has a market cap of $20.29 billion, a P/E ratio of 63.54, a price-to-earnings-growth ratio of 3.70 and a beta of 0.59.

About UL Solutions

UL Solutions NYSE: ULS is a global safety science company that provides testing, inspection, certification, advisory and digital solutions designed to help organizations manage risk, ensure regulatory compliance and drive innovation. With roots dating back to 1894 when it was founded as Underwriters' Electrical Bureau, the company rebranded as UL Solutions following its initial public offering in 2022. Headquartered in Northbrook, Illinois, UL Solutions operates independently to serve a broad range of industries with an emphasis on product safety, performance and sustainability.

The company's core services include standards development, product testing and certification for sectors such as building products, consumer electronics, automotive, life sciences, energy and industrial equipment.

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