Should You Invest in UiPath Ahead of Q1 Earnings?

UiPath Inc. PATH is set to report its first-quarter fiscal 2025 results on May 29, after the bell.

The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 192% on average.

Let's check out how PATH is currently doing.

Stock Looks Cheap Upon Correction

The stock has declined 23.6% year to date against the 14% rally of the industry and the 11.5% rise of the Zacks S&P 500 composite.

UiPath, Inc. Price

UiPath, Inc. price | UiPath, Inc. Quote

On the basis of Price/Earnings, PATH is currently trading at 31.42X compared with the industry's 37.30X. If we look at the Price/Sales ratio, PATH shares currently trade at 6.57X forward sales, slightly below the industry's 6.84X.

Strong Business Model & Expense Management

The company's strong business model that ensures efficient delivery of its end-to-end automation platform services drove the 31% year-over-year revenue growth in the fourth quarter of fiscal 2024. Increases in revenues, expense management and operating discipline have positively impacted the bottom line in the quarter, driving non-GAAP operating margin by 500 basis points.

Ease of Paying Off Short-Term Obligations

PATH's current ratio (a measure of liquidity) was at 3.63 at the end of fourth-quarter fiscal 2024. Although slightly lower than the prior quarter's 3.87, a current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.

Sales and EPS Growth Prospects Strong

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $332.8 million, indicating 15% year-over-year growth. The consensus estimate for the bottom line is pegged at 11 cents per share, indicating no change when compared with the year ago actual figure. The estimate for EPS has remained unchanged over the past 30 days.

The consensus mark for PATH's fiscal 2025 sales stands at $1.56 billion, suggesting year-over-year growth of 19%. The estimate for EPS has remained unchanged over the past 30 days at 57 cents, suggesting year-over-year growth of 5.6%.

Should You Buy PATH?

PATH trades at a discount relative to its industry based on P/E and P/S. The company's liquidity position based on the current ratio remains healthy.

The company may undergo a further correction, especially when PATH does not seem poised for an earnings beat. Our quantitative model suggests that the combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. But that's not the case with PATH at present, as it has an Earnings ESP of 0.00% and carries a Zacks Rank #3.

Given this backdrop, it may not be a bad idea to wait for this fundamentally strong stock to undergo further correction and offer a better entry point rather than rushing to purchase the stock before earnings.

Recent Earnings Snapshots of Some Service Providers

Omnicom OMC reported impressive first-quarter 2024 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.

OMC's earnings of $1.67 per share beat the consensus estimate by 9.9% and increased 7.1% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 1.6% and increased 5.4% year over year.

Equifax EFX reported mixed first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.

EFX's adjusted earnings were $1.5 per share, ahead of the Zacks Consensus Estimate by 4.2% and up 4.9% from the year-ago quarter. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 6.7% from the year-ago quarter.

ManpowerGroup MAN reported mixed first-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year. Revenues of $4.4 billion lagged the consensus mark by 0.6% and fell 7% year over year.

To read this article on Zacks.com click here.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsNewsMarketsAnalyst RatingsTechTrading Ideascontributors
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...