Buy or Sell UiPath Stock?
UiPath (PATH) stock has jumped 7.5% during the past day, and is currently trading at $17.16. We believe there are only a couple of things to fear in PATH stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | High |
| What you get: | |
| Growth | Strong |
| Profitability | Moderate |
| Financial Stability | Very Strong |
| Downturn Resilience | Very Weak |
| Operating Performance | Strong |
| Stock Opinion | Fairly Priced |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $9.1 Bil in market cap, UiPath provides an end-to-end automation platform offering robotic process automation solutions to build, manage, run, engage, measure, and govern organizational automation.
[1] Valuation Looks High
| PATH | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 5.9 | 3.2 |
| Price-to-Earnings Ratio | 39.8 | 23.5 |
| Price-to-Free Cash Flow Ratio | 29.3 | 20.6 |
This table highlights how PATH is valued vs broader market. For more details see: PATH Valuation Ratios
[2] Growth Is Strong
- UiPath has seen its top line grow at an average rate of 14.4% over the last 3 years
- Its revenues have grown 10% from $1.4 Bil to $1.6 Bil in the last 12 months
- Also, its quarterly revenues grew 15.9% to $411 Mil in the most recent quarter from $355 Mil a year ago.
| PATH | S&P 500 | |
|---|---|---|
| 3-Year Average | 14.4% | 5.5% |
| Latest Twelve Months* | 10.1% | 6.1% |
| Most Recent Quarter (YoY)* | 15.9% | 7.3% |
This table highlights how PATH is growing vs broader market.
[3] Profitability Appears Moderate
- PATH last 12 month operating income was $10 Mil representing operating margin of 0.6%
- With cash flow margin of 21.6%, it generated nearly $335 Mil in operating cash flow over this period
- For the same period, PATH generated nearly $230 Mil in net income, suggesting net margin of about 14.8%
| PATH | S&P 500 | |
|---|---|---|
| Current Operating Margin | 0.6% | 18.8% |
| Current OCF Margin | 21.6% | 20.4% |
| Current Net Income Margin | 14.8% | 13.1% |
This table highlights how PATH profitability vs broader market.
[4] Financial Stability Looks Very Strong
- PATH Debt was $82 Mil at the end of the most recent quarter, while its current Market Cap is $9.1 Bil. This implies Debt-to-Equity Ratio of 0.9%
- PATH Cash (including cash equivalents) makes up $1.4 Bil of $2.9 Bil in total Assets. This yields a Cash-to-Assets Ratio of 48.3%
| PATH | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 0.9% | 20.8% |
| Current Cash-to-Assets Ratio | 48.3% | 7.1% |
[5] Downturn Resilience Is Very Weak
PATH has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- PATH stock fell 87.6% from a high of $85.12 on 24 May 2021 to $10.55 on 9 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $26.88 on 12 February 2024 , and currently trades at $17.16
| PATH | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -87.6% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read PATH Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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