Assessing UiPath After Recent Share Price Jump and Strong Fiscal Q1 Earnings

Wondering what to do with UiPath stock right now? You are not alone. There is a lot of chatter from investors weighing whether it is time to jump in or wait longer, and with such dramatic market moves recently, it makes sense to take a closer look. Over the past seven days, UiPath surged 8.3%, building on a strong 12.2% climb over the last month. Despite these short-term gains, the year-to-date number still sits at -3.1%. That might seem disappointing, but the recent momentum hints that risk perceptions could be shifting, especially given broader market optimism around automation and AI tools—a sector where UiPath is positioned at the center of innovation.

Looking back further, long-term returns have been mixed, with the stock off by 3.2% over the past year and 6.8% across three years. Some investors have been rattled by shifting market development trends and tech sector volatility, but there is also a growing sense that a turning point could be near. Importantly, by our valuation rubric, UiPath scores a 5 out of 6 for being undervalued. That is a major signal that the current price may not reflect the true potential value as seen by institutional and retail investors alike.

This brings us directly to the heart of the matter: how does UiPath stack up under various valuation methodologies? Before we share an even simpler yet powerful perspective to cut through the noise, let us break down the traditional valuation checks and what those scores really mean for your investment decision.

Why UiPath is lagging behind its peers

Approach 1: UiPath Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s worth by forecasting its future cash flows and then discounting those figures back to their present value. This approach is widely used for growth companies like UiPath, because it focuses on how much money the business is expected to generate in the years ahead before accounting for its current price.

UiPath’s latest trailing twelve-month Free Cash Flow (FCF) stands at $318.9 Million. According to analyst projections and Simply Wall St’s longer-range estimates, the company’s free cash flows are predicted to rise steadily and reach $700.8 Million by 2035. These projections combine up to five years of analyst opinions with further years extrapolated based on observed industry and business growth rates.

Factoring in these expected cash flows, the DCF model calculates UiPath’s intrinsic value at $17.73 per share. This implies the stock is trading at a 29.3% discount to its intrinsic fair value based on current market pricing. In practical terms, the model suggests shares are meaningfully undervalued given the company’s potential to generate higher free cash flows over time.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for UiPath.

Our Discounted Cash Flow (DCF) analysis suggests UiPath is undervalued by 29.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: UiPath Price vs Sales (P/S) Ratio

The Price-to-Sales (P/S) ratio is often used as a key valuation metric for software companies, especially those that are not yet consistently profitable but show substantial revenue growth. For businesses like UiPath, which reinvest heavily and operate in fast-evolving markets, the P/S ratio can be a more reliable indicator of value than earnings-based measures.

Growth expectations and risk levels play a major role in what constitutes a “normal” or “fair” P/S multiple. Typically, faster-growing companies or those with a higher degree of predictability can justify a higher P/S. Riskier or slower-growing businesses, on the other hand, command lower ratios as a safeguard for investors.

UiPath currently trades at a P/S ratio of 4.4x. This is below the industry average for software companies at 5.5x and less than half the peer average of 9.0x, suggesting the stock may present a relative bargain on a traditional revenue multiple basis.

To provide more tailored context, Simply Wall St calculates a proprietary "Fair Ratio" for UiPath, which is currently 6.2x. This metric goes beyond peer and industry averages by factoring in the company’s own sales growth, scale, profit margins, risk profile, and market cap. Considering these dimensions, the Fair Ratio offers a much clearer benchmark than simply comparing apples to apples within the sector.

Given that UiPath’s actual P/S of 4.4x is meaningfully below its Fair Ratio of 6.2x, the shares appear undervalued based on this multiple and the company's specific outlook.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your UiPath Narrative

Earlier we mentioned there is an even better way to cut through the noise of valuation. Let us introduce you to Narratives, a simple yet powerful tool that lets you frame your investment decisions through your own story of UiPath's future.

With a Narrative, you combine your perspective on the company’s growth, risk, and potential with the numbers, such as future revenue, earnings, and profit margins. This creates a personalized financial forecast and fair value. Narratives help connect “what’s happening in the business” with “what its shares are worth,” so you can see how your beliefs and assumptions compare to the market.

This tool is designed for everyone and is available right on the Community page of Simply Wall St, helping millions of investors build and share their outlooks on companies every day. Narratives update dynamically as new news, results, and forecasts emerge, keeping your valuation current with any market developments.

By comparing your Narrative’s Fair Value to the current share price, you can quickly see if UiPath is a buy, hold, or sell, tailored to your personal thesis. For example, some investors believe UiPath’s long-term AI innovation and new partnerships will drive earnings and assign a Fair Value above $17, while others are more cautious given revenue challenges and use a value closer to $11.70.

Do you think there's more to the story for UiPath? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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