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UiPath Stock: Can Robotic Process Automation Boost Your Portfolio?

By Eric Cuka - Jun 13, 2021 at 9:30AM

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RPA is one of the fastest-growing categories in enterprise software. Here's how to play it.

UiPath (PATH -1.05%), a 2021 high-flyer unicorn IPO, recently had its first earnings report, and the company's stock pulled back on valuation concerns. UiPath's stock price has an all-time high of $90, but now trades closer to $70. 

UiPath is a global software company focused on robotic process automation, also called RPA. The company's software enables organizations to automate data entry and repetitive tasks. RPA technology makes it simple for businesses to build, deploy, and manage bots. These software robots emulate human actions and provide many benefits. Examples include:

  • Increased production times
  • Reduction of costs
  • Increased employee creativity and innovation
  • Improved efficiency
  • Increased employee happiness and retention
  • Improved process quality 
  • Higher employee productivity
  • Improved customer service

UiPath is arguably the best pure-play stock in the RPA space, although it does face increasing competition from companies like Microsoft (MSFT -0.30%). With that said, UiPath is recognized by many as the clear robotic process automation leader, and customers have been increasing consumption once on the platform. UiPath's dollar-based net retention rate is 145%, which is excellent.

Gartner (IT -0.61%) predicts that robotic process automation software revenues will be approximately $2 billion this year, which is up 20% year over year. Additionally, RPA revenues are estimated to grow at double-digit rates through the end of 2024. UiPath's current market cap is approximately $36 billion, which represents a very expensive EV/sales multiple of around 60 times. Based on FY2024 estimates, the stock trades at an EV/sales multiple of around 25 times. With that said, many growth investors are still very bullish about the upside potential of the company. Disruptive technology ETF ARKK (ARKK -1.91%) has been loading up on shares, but should you? Is UiPath stock a buy now? Watch the below video for detailed analysis and due diligence on UiPath. 

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Eric Cuka owns shares of ARK Innovation ETF, Microsoft, and UiPath Inc. The Motley Fool owns shares of and recommends Microsoft. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

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Stocks Mentioned

UiPath Inc. Stock Quote
UiPath Inc.
$19.30 (-1.05%) $0.20
Microsoft Corporation Stock Quote
Microsoft Corporation
$290.45 (-0.30%) $0.87
Gartner, Inc. Stock Quote
Gartner, Inc.
$312.12 (-0.61%) $-1.93
ARK ETF Trust - ARK Innovation ETF Stock Quote
ARK ETF Trust - ARK Innovation ETF
$47.12 (-1.91%) $0.92

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