$18.00
$38.60
bear $18.00
base $30.70
bull $38.60
margin of safety $20.00
market price* $73.31
UL Solutions tests, inspects and certifies products (the UL Mark on electrical goods, appliances, batteries, building products, EV charging and more) and sells related software and advisory services. Revenue was $3.05 billion in 2025, up from $2.52 billion in 2022, and most of it recurs because manufacturers need certification before they can sell into regulated markets. Roughly 41% of sales are in the United States, 25% in Greater China (mainland China, Hong Kong, Taiwan), 13% in the rest of Asia Pacific and about 21% in Europe, the Middle East and Africa. How we measured earnings. We start from operating cash flow, strip out the swing in working capital, subtract stock-based compensation as a real cost (about $47 million in 2025; none before the April 2024 listing), and subtract only the part of capital spending needed to keep labs and equipment running (spending tied to revenue growth is treated as discretionary). We left pension funding in the earnings figure because it is a recurring cash cost. On that basis, earnings per share were $1.68 (2022), $1.43 (2023), $1.42 (2024) and $1.70 (2025). Capital spending is heavy (6-8% of revenue) and has absorbed most of the growth in cash generation, which is why earnings per share have grown much more slowly than revenue. A $37 million goodwill write-down in 2023 was non-cash and is added back. To value the business before its lenders, we add back cash interest ($17 million to $57 million a year; $40 million in 2025), giving business cash flow of $1.76, $1.59, $1.71 and $1.90 per share for 2022 to 2025. Starting level. We anchor on the median of 2023-2025 ($1.71 per share), a period that reflects the business as it is today, and trim it by $0.08 per share to reflect the Employee Health and Safety software business, sold for about $210 million in cash in the second quarter of 2026 (a $191 million gain that inflated reported first-half 2026 profit and is ignored in our earnings level). Its earnings are not disclosed separately; its segment as a whole earned only $14 million of operating income in 2025, so the trim is small. The anchor of about $1.63 is below the 2025 figure of $1.90 on purpose, since 2025 benefited from lower capital spending than 2023-24. Business cash flow grew 11% in 2025; our base case assumes 3% in year one, below that trailing rate. Base case (about $30.70 per share). Cash flow grows 3% a year for three years, then tapers to 2% by year seven, roughly the pace earnings per share have actually compounded since 2022 (about 2.5%) and below revenue growth of 6-7%. We credit only growth already in evidence: revenue rising every year in the record, recurring certification demand tied to regulation, and a business that funds its own expansion. We leave out margin expansion, new markets, share gains and management targets. After year ten we assume the earnings simply persist, without growth, because the UL certification mark and the regulatory requirements behind it are structural. The business is worth about $33.05 per share; it owes about $0.58 per share net (a $301 million revolver due October 2030, at roughly SOFR plus 1%, less about $184 million of cash beyond operating needs; total cash was $434 million at June 30, 2026), and outside owners of partly owned subsidiaries take about $1.82 (about 5.5% of the value, matching their share of net income of $20 million of $345 million). Equity value: about $30.70. Bear case (about $18.00 per share). Greater China is a quarter of revenue ($761 million in 2025), and much of that is export manufacturers seeking certification for Western markets, so a trade-driven shift of production away from China is a specific, visible exposure. We cut cash flow by 15% (fixed-cost laboratories lose operating leverage), assume no growth for ten years, and then a 2% annual decline. Business value about $19.67 per share, net debt about $0.58, outside owners about $1.08: equity about $18.00. Debt is modest, and business cash flow covers interest many times over in every case. A putative class action filed in February 2026 (alarm-system control units listed as UL-compliant) is unquantified; the company says it has no estimable loss, and we include no specific cost. Bull case (about $38.60 per share). Cash flow starts at the 2025 level ($1.82 after the divestiture adjustment) and grows 5% for three years, 4% for three, then 3%, which is below the 6-7% revenue growth the business has actually delivered and assumes capital intensity stays at the 2025 level of 6.5% of revenue. Business value about $41.51 per share, net debt about $0.58, outside owners about $2.28: equity about $38.65. What would make this wrong. Higher capital spending for lab capacity, a sharper decline in China-related testing or a loss of standing for the UL Mark would lower value. Not reconciled: the earnings of the divested unit, and the exact cash needed to run operations (we assumed about $250 million). Only the 2024 and 2025 annual filings and the June 2026 quarterly data were available, so the record covers four years, not ten.