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UL Solutions Inc.

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Specialty Business ServicesSector: Industrials

Fair Value Summary

Current Price$77.53
5Y Range26.30 – 40.84
5Y Selected33.57
(-) Safety Margin70.37%
5Y Buy Price$9.95
Upside (to Buy Price)-87.17%
10Y Range28.39 – 42.72
10Y Selected35.56
(-) Safety Margin70.37%
10Y Buy Price$10.54
Upside (to Buy Price)-86.41%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.9423
Revenue R2 (10Y)0.9235
Net Income R2 (5Y)0.6948
Net Income R2 (10Y)0.5727
EBITDA R2 (5Y)0.7054
EBITDA R2 (10Y)0.7848
FCF R2 (5Y)0.3402
FCF R2 (10Y)0.0355
Safety Score0.2963

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth3.96%3.96%3.97%3.97%3.98%3.98%3.99%3.99%4.00%4.00%
Revenue2,983.563,101.773,224.803,352.863,486.183,624.963,769.433,919.854,076.464,239.52
EBITDA698.45726.12754.92784.90816.11848.60882.42917.63954.30992.47
D&A-166.05-172.63-179.47-186.60-194.02-201.74-209.78-218.16-226.87-235.95
EBIT532.40553.49575.45598.30622.09646.86672.64699.48727.42756.52
Pro forma Taxes-103.39-107.49-111.75-116.19-120.81-125.62-130.63-135.84-141.27-146.92
NOPAT429.01446.00463.70482.11501.28521.23542.01563.64586.16609.60
Capital Expenditures-194.51-202.21-210.23-218.58-227.27-236.32-245.74-255.55-265.76-276.39
NWC Investment1.331.391.441.501.571.631.701.771.841.91
(+) D&A166.05172.63179.47186.60194.02201.74209.78218.16226.87235.95
Free Cash Flow401.88417.81434.38451.63469.59488.29507.75528.01549.11571.08
Diluted Shares Outstanding202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00202,750,000.00

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.46%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF398.40401.40382.52364.55347.43331.14315.62300.85286.78273.38
Raw: 7,250.34
5,135.75
Raw: 8,817.26
4,041.06

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value7,030.057,443.13
(-) Net Debt556.75556.75
Equity Value6,473.306,886.38
(/) Shares Out202.75202.75
Fair Value$31.93$33.96
(-) Safety Margin70.37%70.37%
Buy Price$9.46$10.06
Current Price$77.53$77.53
Upside (to Buy Price)-87.80%-87.02%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.96%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF398.03399.72377.46356.46336.64317.93300.28283.63267.91253.07
Raw: 5,884.81
4,020.55
Raw: 7,156.61
3,022.48

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value5,888.866,313.61
(-) Net Debt556.75556.75
Equity Value5,332.115,756.86
(/) Shares Out202.75202.75
Fair Value$26.30$28.39
(-) Safety Margin70.37%70.37%
Buy Price$7.79$8.41
Current Price$77.53$77.53
Upside (to Buy Price)-89.95%-89.15%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.96%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF398.76403.10387.70372.90358.68345.02331.90319.29307.17295.53
Raw: 9,413.45
6,915.62
Raw: 11,447.86
5,697.94

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value8,836.779,218.00
(-) Net Debt556.75556.75
Equity Value8,280.028,661.25
(/) Shares Out202.75202.75
Fair Value$40.84$42.72
(-) Safety Margin70.37%70.37%
Buy Price$12.10$12.66
Current Price$77.53$77.53
Upside (to Buy Price)-84.39%-83.67%

Reverse DCF: Market Implied Growth

Current Price$77.53
WACC Used9.1%
IMPLIED REVENUE GROWTH145.85%
Metric2027202820292030203120322033203420352036
Implied Revenue7,382.8618,150.7444,623.53109,706.77269,713.66663,089.981,630,204.134,007,850.509,853,284.7924,224,262.17
Constant Implied Growth145.85%145.85%145.85%145.85%145.85%145.85%145.85%145.85%145.85%145.85%
Implied Free Cash Flow0.741.824.4610.9726.9766.31163.02400.79985.332,422.43
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF0.691.473.307.4416.7737.7885.14191.86432.35974.29

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$34.945.04%$22.22-36.42%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$34.61
Median
$34.02
10th Percentile
$27.98
90th Percentile
$41.95

Fair Value Distribution

$24.16 - $26.12
35
$26.12 - $28.08
73
$28.08 - $30.04
115
$30.04 - $32.00
133
$32.00 - $33.96
141
$33.96 - $35.92
136
$35.92 - $37.87
120
$37.87 - $39.83
91
$39.83 - $41.79
54
$41.79 - $43.75
29
$43.75 - $45.71
29
$45.71 - $47.67
16
$47.67 - $49.63
9
$49.63 - $51.58
9
$51.58 - $53.54
7
$53.54 - $55.50
0
$55.50 - $57.46
1
$57.46 - $59.42
1
$59.42 - $61.38
0
$61.38 - $63.34
1