UL Solutions posted strong Q1 2026 growth with margin expansion across all segments, reinforcing its moat in testing, certification, and compliance software. The stock looks attractive for Buy-rated investors, though the valuation remains rich.
UL Solutions Inc. (ULS) merits a Buy rating for moderate-risk investors with a medium-term horizon. The investment case rests on three facts: Q1 2026 revenue reached $758M, up 7.5% year over year; adjusted EBITDA rose 22.4% to $197M; and adjusted EBITDA margin expanded 320 basis points to 26.0%. Management also raised its 2026 adjusted EBITDA margin outlook to approximately 27.0%.
ULS combines a century-old safety brand with recurring certification work, a global testing network, and software tied to regulatory compliance and supply-chain visibility. The UL Mark appears on billions of products, while the company offers more than 400 conformity assessment services against more than 4,000 global standards. That combination gives ULS a stronger moat than a generic consulting firm, although the stock already reflects much of that quality.
At the latest quoted price of $87.76, ULS trades at 52.9x trailing earnings, 39.1x forward earnings, and 2.1x PEG. The valuation is demanding, but earnings execution is strong: ULS has beaten quarterly EPS estimates in each of the last seven reported quarters, including Q1 2026 adjusted EPS of $0.50 versus a $0.41 estimate. The balance between durable demand and a premium multiple supports accumulation rather than an aggressive chase.
UL Solutions Inc. (ULS) is a Northbrook, Illinois-based industrial company founded in 1894 and listed on the NYSE since April 2024. It employs approximately 14,587 people and operates across Industrial, Consumer, and Risk and Compliance Software. Its services cover testing, inspection, certification, technical advisory, training, regulatory compliance, supply-chain transparency, and sustainability workflows.
The business earns revenue from certification testing, ongoing certification services, non-certification testing, advisory work, and software. Ongoing certification services are important because customers generally need continued monitoring to retain authorization to use the UL Mark. The result is a business model with both project revenue and recurring activity tied to products already in the market.
The 2025 Form 10-K identifies manufacturers, building and asset owners, regulators, and end users among the company’s stakeholders. ULS serves industries such as energy, industrial automation, engineered materials, built environments, consumer electronics, medical devices, appliances, HVAC, lighting, new mobility, smart products, and 5G.
Industrial was the clear growth leader in Q1 2026. Revenue reached $375M, up 10.3% in total and 8.2% organically. Adjusted EBITDA increased 20.6% to $123M, while adjusted EBITDA margin rose 280 basis points to 32.8%. Energy, automation, and materials provided particular strength, supported by ongoing certification services and certification testing.
Consumer generated Q1 revenue of $318M, up 4.6% in total and 3.0% organically. Adjusted EBITDA increased 25.0% to $55M, and margin expanded 280 basis points to 17.3%. Consumer technology, appliances, and HVAC drove growth. Management also identified lower-margin, nonstrategic service-line exits as a factor suppressing reported consumer growth.
Risk and Compliance Software produced Q1 revenue of $65M, up 6.6% in total and 4.9% organically. Adjusted EBITDA grew 26.7% to $19M, with margin expanding 460 basis points to 29.2%. Demand for supply-chain insights in retail led the segment. The remaining software portfolio is positioned around regulatory requirements, supply-chain transparency, sustainability, and risk management.
ULS completed the sale of its Employee Health and Safety software business on April 1, 2026, for approximately $202M in cash. Management described that business as slower growing than the remaining software portfolio. Advisory activities were also reallocated into Industrial under the updated segment structure, making segment comparisons more focused on the company’s current operating model.
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The flagship asset is the UL Mark, not a single piece of equipment. The mark carries regulatory and commercial value because customers use it to demonstrate product safety and market acceptance. ULS says the mark appears on billions of products, and ongoing certification services help customers maintain that authorization. This installed base creates a durable route from initial testing to recurring monitoring.
ULS is extending the mark into emerging product categories. In Q1 2026, it granted its first global safety certification for a robot operating in a public environment, certifying Simbe’s Tally under the UL 3300 standard. It also issued the first certifications for AI-enabled products under UL 3115 to Qcells and Omniconn. These certifications covered areas including robustness, reliability, transparency, and human oversight.
On May 13, 2026, ULS launched an AI-powered ULTRUS UL 360 capability for calculating product carbon footprints from supplier emissions data. The product targets sustainability, procurement, and product teams facing Scope 3 reporting requirements, including Europe’s CSRD and California’s SB 253. The software gives ULS a way to monetize the compliance relationship beyond laboratory testing.
ULS’s competitive advantage comes from the combination of accreditation, trust, standards expertise, and customer integration. The 2025 Form 10-K describes a market where capabilities, global reach, laboratories, equipment, regulatory credentials, and integrity influence customer choice. A new entrant can build a lab, but reproducing the UL brand and its embedded role in product approval is a much slower task.
The innovation opportunity is strongest where several compliance needs overlap. Management linked robotics certification with electromagnetic compatibility, wireless safety, cybersecurity, embedded software, and functional safety. That cross-selling potential allows ULS to address a more complex customer problem instead of selling a single test.
Portfolio management is another competitive lever. ULS agreed to acquire Eurofins Scientific’s Electrical and Electronics business for approximately €575M of enterprise value. The transaction is designed to expand capabilities in Europe, the Middle East, Africa, and Asia Pacific while strengthening the Consumer segment in electrical safety and connected products.
Operational execution improved materially in Q1 2026. Management cited higher utilization across engineering and laboratory teams, disciplined headcount management, productivity gains, expense control, and restructuring savings. Those actions produced a 26.0% adjusted EBITDA margin and helped lift adjusted diluted EPS 35.1% year over year to $0.50.
ULS operates close to customer manufacturing and research locations. Management reported the strongest movement in ongoing certification activity across Southeast Asia, including Vietnam, India, Malaysia, and Indonesia, alongside increases from large bases in the United States and China. The company’s stated operating principle is to test and perform certification services wherever customers need them.
Q1 operating cash flow was $219M, capital expenditures were $69M, and free cash flow was $150M. The trailing 12-month figures cited by management were $665M of operating cash flow and $450M of free cash flow. ULS expects 2026 capital expenditures to equal approximately 7% to 8% of revenue, supporting laboratories, technology, and operating capacity.
Management also signed an agreement to sell its shares in DQS Holdings GmbH for approximately €105M in cash. Proceeds from portfolio actions, cash on hand, and available credit capacity are intended to support the Eurofins transaction while preserving investment-grade balance-sheet metrics.
ULS operates in a large, fragmented outsourced testing, inspection, and certification market. A June 2026 investor presentation estimated the global TIC market at approximately $142B using 2022 market data. The company also identifies product lifecycle services, asset performance, sustainability advisory, and supply-chain services as adjacent opportunities.
The company’s 2026 guidance calls for mid-single-digit constant-currency organic revenue growth. That outlook aligns with the reported Q1 organic growth rate of 5.7% and management’s cited demand drivers: electrification, data-center construction, advanced product development, fire safety, building construction, supply-chain compliance, and ongoing certification services.
Adjacent consulting markets add another growth pool. Gartner estimates the global consulting market at $397B with a projected 6.0% constant-currency five-year CAGR through 2029. Gartner identifies AI, cybersecurity, and digital product engineering as major demand drivers, areas that overlap with ULS’s AI safety, connected-product, and compliance offerings.
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ULS serves customers that need product safety, regulatory approval, market access, and ongoing compliance. Industrial customers include energy, automation, materials, building, and asset owners. Consumer customers span electronics, medical devices, information technology, appliances, HVAC, lighting, retail, smart products, new mobility, and 5G.
The customer relationship extends beyond a single certification event. The UL Mark, recurring inspections, supply-chain data, sustainability reporting, and regulatory software create several points of contact. ULS also hosted a data-center infrastructure summit in Silicon Valley during Q1, drawing more than 150 attendees from 41 companies. That event shows the company’s role as a technical convener in a rapidly expanding customer ecosystem.
Management reported that customer behavior remained normal despite geopolitical uncertainty, with no material effect on the business from the Middle East situation during Q1. The company said the Middle East represents a very small portion of its EMEA revenue and that customers continue to adjust research, manufacturing, and supply-chain locations based on business needs.
ULS’s 2025 Form 10-K names Intertek, SGS, Bureau Veritas, and Eurofins as major global competitors. The market also includes regional laboratories, niche certification bodies, engineering firms, point-solution software providers, and customer-owned testing capabilities.
ULS describes itself as the largest TIC services provider headquartered in North America by revenue, with leadership positions in Europe and Asia. Its strongest defenses are the UL brand, broad standards coverage, regulatory recognition, installed customer relationships, and the ability to combine testing with software and advisory services.
The principal competitive risk is that global peers have larger international footprints, while software customers can choose specialized point solutions. ULS’s response is visible in the Eurofins E&E acquisition, ULTRUS product development, and the shift toward risk and compliance software. The strategy is sensible, but integration and execution will determine whether the portfolio produces a higher-quality growth mix.
ULS operates in an environment shaped by currency movements, trade policy, manufacturing relocation, and geopolitical uncertainty. In Q1, foreign-exchange translation increased revenue by $13M, or 1.8%, while the related expense translation reduced adjusted EBITDA margin by approximately 40 basis points. Management’s 2026 outlook assumes an approximately 1.0% revenue FX tailwind offset by higher expenses.
Manufacturing relocation is creating activity across several regions rather than a simple return to the United States. Management said it was not seeing a dramatic reshoring shift, but it did observe movement across Asia and modest increases from the United States and China. Because certification follows the customer’s product and supply-chain footprint, geographic movement can redirect work without removing the underlying compliance requirement.
The macro backdrop carries less risk for ULS than for a highly cyclical manufacturer because testing and certification are tied to regulatory access and product development. Management specifically described demand drivers such as electrification, data centers, fire safety, and compliance software as structural. The Q1 results provide evidence of resilience, although the 2026 outlook still includes a roughly 1.0% revenue reduction from restructuring-related service exits.
UL Solutions carries an A- balance sheet grade, supported by a $202M cash sale of its Employee Health and Safety software business and a capital structure that still leaves room for continued investment.
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Get Full Access →Q1 2026 revenue rose 7.5% to $758M and adjusted EBITDA jumped 22.4% to $197M, with margin expanding 320 basis points to 26.0%.
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Get Full Access →Management raised its 2026 adjusted EBITDA margin outlook to approximately 27.0%, signaling continued execution after seven straight quarterly EPS beats.
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Get Full Access →At $87.76, ULS trades at 52.9x trailing earnings and 39.1x forward earnings, so the valuation already prices in a lot of quality.
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Get Full Access →The report’s fair value sits at $95, implying modest upside from the latest quote and supporting a Buy stance rather than an aggressive chase.
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Get Full Access →UL Solutions is a high-quality industrial services company with a rare combination of brand trust, regulatory embeddedness, recurring certification work, and emerging software capability. Q1 2026 confirmed the operating model: revenue grew 7.5%, adjusted EBITDA rose 22.4%, adjusted EPS increased 35.1%, and adjusted EBITDA margin expanded to 26.0%.
The stock is not cheap, and the 52.9x trailing P/E leaves valuation sensitivity as the main risk. Still, the balance sheet, investment-grade rating, 2026 margin outlook, seven-quarter EPS beat streak, and exposure to AI safety, electrification, data centers, and compliance software support a measured Buy stance. At $87.76, ULS offers a credible medium-term compounding story, provided management converts its portfolio strategy into sustained organic growth and cash generation.
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