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If you are wondering whether UiPath’s current share price really reflects what the business is worth, you are not alone. This article is going to focus squarely on that question.
UiPath shares last closed at US$14.34, with a 7 day return of 16.8% decline, a 30 day return of 11.0% decline, a year to date return of 9.7% decline, a 1 year return of 10.1% and a 3 year return of 2.0% decline, which suggests investors have seen very different outcomes depending on when they bought in.
Recent headlines around UiPath have focused on its position in automation software and how investors are reassessing growth stories in the sector, which helps explain some of the sharp short term moves. Broader conversations about software valuations and the role of automation have also kept UiPath on many watchlists, even when the share price has pulled back.
On our checks, UiPath scores 2 out of 6 on valuation. This means it screens as undervalued on two of the tests in our value score. Next we will walk through the main valuation approaches before circling back to a more holistic way of thinking about what the stock might be worth.
UiPath scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today’s value to estimate what the business might be worth right now.
For UiPath, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month Free Cash Flow is about $319.9 million. Analyst inputs and extrapolated estimates suggest annual Free Cash Flow figures rising into the mid hundreds of millions over time, with a projected Free Cash Flow of $684.9 million in 2035, which is then discounted back each year.
When all of these discounted cash flows are added together, the DCF model points to an estimated intrinsic value of US$17.75 per share. Compared with the recent share price of US$14.34, the model implies UiPath trades at roughly a 19.2% discount, which screens as undervalued on this method.
For a profitable company, the P/E ratio is a straightforward way to think about value, because it links what you pay per share to the earnings that each share is generating today.
In simple terms, higher growth expectations and lower perceived risk usually justify a higher P/E, while slower growth or higher risk tend to line up with a lower, more cautious multiple. So you can think of a “normal” P/E as the level that balances those growth and risk trade offs.
UiPath currently trades on a P/E of 33.4x. That sits above the broader Software industry average of 31.6x, but below the peer group average of 54.1x. To add another lens, Simply Wall St’s Fair Ratio for UiPath is 14.4x. This Fair Ratio is a proprietary estimate of what P/E might be reasonable after factoring in UiPath’s earnings growth profile, its industry, profit margins, market cap and specific risks.
Because the Fair Ratio builds those company specific inputs in directly, it can be more informative than a simple peer or industry comparison. On this measure, UiPath’s current 33.4x P/E is higher than the 14.4x Fair Ratio. This suggests that the shares screen as overvalued on this approach.
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives on the Community page to tell your story for UiPath by linking your view on its automation and AI opportunity, margins and risks to a set of revenue, earnings and profit margin estimates. This turns that into your own Fair Value that you can compare directly with the current share price. It then updates automatically as new earnings, index inclusions or news arrive. You can also see how different investors land on very different fair values. For example, some users currently see UiPath closer to US$17 while others sit nearer to US$12, reflecting contrasting views on how its agentic automation roadmap, cloud ARR of over US$975m, index adds, FX headwinds and SaaS transition might shape future outcomes.
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.
Companies discussed in this article include PATH.
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