UiPath Stock Looks Like a Bargain Amid Discounted Valuation

UiPath PATH, a key player in the robotic process automation (“RPA”) market, is trading at a forward 12-month price-to-sales (P/S) ratio of 4.12X, significantly below the industry average of 5.75X. This valuation gap positions the stock as a potentially attractive opportunity for investors seeking exposure to enterprise automation at a relative discount.

Despite broader tech-sector volatility and lingering macroeconomic uncertainty, UiPath has demonstrated consistent revenue growth, supported by strong demand across industries like finance, healthcare and logistics. The company’s enterprise-first approach, coupled with expanding global adoption and a robust recurring revenue model, continues to fuel its top-line performance.

Valuation Signals Opportunity in RPA Space

The lower forward P/S ratio may reflect market caution regarding UiPath’s route to sustained profitability or general risk-off sentiment in the technology space. However, for long-term investors with a growth mindset, the current valuation may underappreciate UiPath’s strategic positioning and innovation pipeline.

UiPath is not only a leader in RPA but also a frontrunner in AI-driven automation. The company’s integrations with major platforms like Microsoft MSFT and SAP SAP extend the ecosystem and cement its relevance in large-scale enterprise digital transformation initiatives. These partnerships, combined with UiPath’s developer-friendly platform and broad product suite, enhance its competitive advantage.

PATH vs. Peers

When compared with other enterprise software peers, UiPath stands out on valuation. ServiceNow NOW trades at a much steeper forward P/S multiple of 13.85X, buoyed by its strong profitability and expansive software portfolio. While ServiceNow’s premium is warranted, it sets a high entry bar for investors.

Pegasystems PEGA, another automation software peer, trades at 4.93X forward P/S. Despite Pega’s strengths in client engagement and software capabilities, UiPath’s faster revenue growth trajectory and stronger focus on automation could translate to superior upside potential over the long run.

UiPath’s DNA is in automation-first solutions, whereas ServiceNow and Pegasystems are broader enterprise platforms with automation as part of a wider offering.

Momentum Is Building

UiPath’s shares have gained 19% over the past three months. However, it lags the broader industry’s 35% growth.

The rising momentum in earnings estimates could signal more strength ahead. The Zacks Consensus Estimate for UiPath’s earnings has been trending higher over the past 60 days, another positive sign for bullish investors.

Reinforcing this outlook, UiPath currently carries a Zacks Rank #1 (Strong Buy), placing it among the top-rated stocks based on earnings estimate revisions and valuation. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bottom Line: A Growth Stock Hiding in Plain Sight

While sentiment around tech stocks remains mixed, UiPath’s fundamentals are steadily strengthening. The company’s discounted valuation, robust product offering, growing international footprint and strong positioning in the fast-growing automation market present a compelling case for upside.

For investors seeking value within growth, UiPath offers a rare combination of relative affordability and future potential, making it a stock worth watching as the automation revolution continues to unfold.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research