Keep an Eye on UiPath’s Dec. 8 Earnings for Signs of Future Profitability

Stock Market

UiPath (NYSE:PATH) is a software company that is transforming the rapidly growing software automation industry by providing solutions to automate business processes. Its services apply to many industries such as healthcare, telecommunication, banking, insurance and manufacturing. PATH stock opened at $46.82 on Dec. 8.

A magnifying glass zooms in on the website homepage of UiPath (PATH).

Source: dennizn / Shutterstock.com

That’s after opening at an IPO price of $56 a share in April. UiPath is a disruptive company that has the potential to change the way businesses operate. I’m not excited by its stock, though. It’s too early for me. Here’s what I do and don’t like about PATH stock.

Robotic Process Automation

The first place to look when evaluating companies like UiPath is the business model. UiPath’s platform allows businesses to digitally transform their activity with automation and scalability. UiPath’s software can perform repetitive tasks, providing flexibility, productivity and ease of use for people. UiPath employs both artificial intelligence and machine intelligence to handle a large suite of business operations.

Time is a valuable commodity in both personal life and business. UiPath offers a way to save time by automating menial tasks. It allows workers to be more efficient and productive. Robotic process automation (RPA) speeds up dull but important business tasks.

Besides increasing employee satisfaction, RPA has a plethora of other benefits, such as cost savings, higher accuracy and greater resilience to periods of increased workload.

This means employees can feel more valuable to their companies and focus on more engaging, complex work. Better and more sustainable levels of compliance can be reached. It is a win-win situation for both businesses and employees.

UiPath believes in this future of fully automated businesses and offers free courses on RPA to developers and users to familiarize themselves with the UiPath platform. It is also working with schools to help students develop the knowledge and skills to navigate this new automated business world. UiPath also invests in building a strong community with meetups, a forum and a blog to provide the latest news and information about its technology.

PATH Stock Isn’t Profitable Yet

I like the business opportunity that UiPath is addressing, and it is already a leader in its industry. However, I do not like its stock after examining its financial results.

The company highlights its ARR (annualized renewal run-rate), which increased 60 percent year-over-year, a great performance. The revenue growth increase of 40 percent year-over-year to $195.5 is also very positive.

Still, net losses for the six months ended July 31 widened to $339.7 million compared to a net loss of $47.9 for year-ago period. PATH stock is overvalued based on its price-to-book ratio of nearly 12 times.

Wait for better financial performance from this highly promising technology company. That will determine if it can really transform the digital world of business. Keep an eye on PATH stock earnings reported on Dec. 8 for progress on its financials.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.

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