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What investors are really paying for in a sales multiple is future growth and the risk that growth disappoints. Faster, more predictable growers can usually justify a higher multiple, while slower or riskier names tend to trade closer to, or below, the industry norm.

UiPath currently trades on about 5.27x sales, slightly above the Software industry average of roughly 4.91x but well below the peer group average of around 9.46x. Simply Wall St’s Fair Ratio for UiPath, at about 6.46x, is a proprietary estimate of what the sales multiple should be given its growth profile, margins, industry, market cap and risk. Because it is tailored to UiPath’s specific fundamentals rather than broad group averages, it offers a more nuanced benchmark than simple peer or sector comparisons. On this basis, the current 5.27x sales looks below the Fair Ratio, which may indicate undervaluation.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your own story about UiPath to the numbers by linking what you believe about its products, partnerships, growth and risks to a concrete forecast for future revenue, earnings, margins and ultimately a Fair Value estimate. You can then compare this directly to today’s share price to decide whether it looks like a buy, a hold or a sell. On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool that turns their view of a company into a living valuation that automatically refreshes when new information such as earnings, guidance or major news is released. This helps their Fair Value stay in sync with reality instead of going stale. For UiPath, one Narrative might lean into its AI partnerships and cloud momentum to justify a higher Fair Value closer to the most bullish target around $17. A more cautious Narrative could focus on competition, FX and SaaS transition risks to anchor Fair Value nearer the most bearish view around $11.71, showing how different stories can lead to very different but clearly framed decisions.

Do you think there’s more to the story for UiPath? Head over to our Community to see what others are saying!

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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