China Online Education Group (COE) AI Stock Analysis

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China Online Education Group

(NYSE MKT:COE)

55Neutral

China Online Education Group demonstrates impressive revenue growth and potential market expansion, bolstered by positive guidance. However, significant profitability and balance sheet challenges persist, and technical indicators suggest the stock may be overbought. These factors result in a moderate overall score.

China Online Education Group (COE) vs. S&P 500 (SPY)

Market Cap

$59.32M

Dividend YieldN/A

Average Volume (3M)12.66K

Price to Earnings (P/E)―

Beta (1Y)-0.28

Revenue Growth70.56%

EPS Growth9.71%

CountryUS

Employees310

SectorTechnology

Sector Strength46

IndustryEducation & Training Services

Share Statistics

EPS (TTM)-1.21

Shares Outstanding4,027,222

10 Day Avg. Volume15,983

30 Day Avg. Volume12,665

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)4.39

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

China Online Education Group Business Overview & Revenue Model

Company DescriptionChina Online Education Group (COE) is a leading online education platform in China, dedicated to providing high-quality English language education to students. The company operates through its flagship brand 51Talk, which offers one-on-one English lessons with experienced teachers. COE leverages technology to deliver personalized learning experiences, aiming to make English learning more accessible and effective for Chinese students.

How the Company Makes MoneyChina Online Education Group primarily generates revenue through the sale of online English language courses to students. The company offers a variety of packages and subscription plans that allow students to engage in one-on-one English lessons with teachers. Revenue is primarily driven by the number of active students and the frequency of their lessons. Additionally, COE may engage in strategic partnerships with educational institutions and other businesses to expand its reach and enhance its service offerings. By focusing on personalized education and leveraging technology, the company aims to maintain a steady stream of income through its educational services.

China Online Education Group Financial Statement Overview

Summary

China Online Education Group exhibits strong revenue growth but faces challenges with profitability due to negative profit margins and net income. The balance sheet shows financial stress with negative equity, posing a risk. Despite improved cash flow, historical volatility suggests caution.

Income Statement

Neutral

The company experienced a robust revenue growth rate of approximately 80.2% from 2022 to 2023. However, the financials are challenged by negative profit margins: a gross profit margin of 76.7%, an EBIT margin of -50.4%, and a net profit margin of -55.4% in 2023. The persistent negative net income indicates a struggle to achieve profitability.

Balance Sheet

Negative

The balance sheet is concerning with a negative stockholders' equity of $-8.34M in 2023, indicating liabilities exceed assets. The debt-to-equity ratio is not meaningful due to negative equity, and the equity ratio is also negative, highlighting financial instability and risk.

Cash Flow

Neutral

Cash flow improved with a swing to positive free cash flow of $272K in 2023 from a significant negative in 2022. The operating cash flow to net income ratio suggests some ability to cover expenses, but the past volatility in cash flows remains a risk factor.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
24.69M	27.11M	15.05M	339.90M	314.40M	212.01M
	Gross Profit
19.18M	20.79M	11.85M	252.36M	225.56M	149.14M
	EBIT
-11.33M	-13.66M	-12.36M	11.19M	15.98M	―
	EBITDA
-11.53M	-13.56M	-12.26M	-4.50M	21.88M	―
	Net Income Common Stockholders
-11.00M	-15.03M	-12.84M	18.74M	21.24M	―
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
103.84M	23.39M	23.06M	131.96M	201.08M	134.34M
	Total Assets
157.03M	31.16M	27.63M	187.26M	338.20M	200.31M
	Total Debt
14.87M	631.00K	734.00K	6.08M	14.78M	10.24M
	Net Debt
-21.93M	-20.67M	-17.45M	-27.61M	-35.22M	-38.77M
	Total Liabilities
310.11M	39.35M	21.06M	303.05M	470.89M	349.20M
	Stockholders Equity
―	-8.34M	6.58M	―	―	―
Cash Flow		Free Cash Flow
-167.41M	272.00K	-45.71M	―	105.63M	55.28M
	Operating Cash Flow
-170.73M	559.00K	-45.70M	―	110.09M	56.87M
	Investing Cash Flow
166.64M	2.45M	2.51M	99.45M	―	―
	Financing Cash Flow
32.03M	0.00	20.48M	―	1.65M	―

China Online Education Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price14.73

Price Trends

50DMA

19.67

Negative

100DMA

18.75

Negative

200DMA

16.70

Negative

Market Momentum

MACD

-1.48

Positive

RSI

32.97

Neutral

STOCH

11.32

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COE, the sentiment is Negative. The current price of 14.73 is below the 20-day moving average (MA) of 18.52, below the 50-day MA of 19.67, and below the 200-day MA of 16.70, indicating a bearish trend. The MACD of -1.48 indicates Positive momentum. The RSI at 32.97 is Neutral, neither overbought nor oversold. The STOCH value of 11.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COE.

China Online Education Group Risk Analysis

China Online Education Group disclosed 68 risk factors in its most recent earnings report. China Online Education Group reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

China Online Education Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EDU	74 Outperform	$7.45B	19.01	10.40%	―	34.42%	28.54%
TAL	72 Outperform	$4.49B	50.49	3.23%	―	55.62%	―
Sector *	58 Neutral	$11.04B	9.83	-6.56%	3.16%	7.59%	-10.43%
COE	55 Neutral	$59.32M	―	180.24%	―	70.56%	9.71%
DAO	54 Neutral	$241.80M	79.61	25.15%	―	3.01%	―
CHGG	45 Neutral	$53.61M	―	-147.16%	―	-13.78%	-5297.96%

* Technology Sector Average

Performance Comparison

COE

China Online Education Group

14.73

8.11

122.51%

EDU

New Oriental Education Tech

44.82

-42.24

-48.52%

CHGG

Chegg

0.51

-6.31

-92.52%

TAL

TAL Education Group

9.80

-2.15

-17.99%

DAO

Youdao

7.73

4.16

116.53%

China Online Education Group Earnings Call Summary

Earnings Call Date: Mar 21, 2025 | % Change Since: -35.17% | Next Earnings Date: Jun 3, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive trend with significant revenue and billing growth, improved cash flow, and reduced losses. However, increased operating expenses and negative earnings per ADS indicate some ongoing challenges. Overall, the positive aspects outweigh the negatives.

Highlights

Strong Revenue Growth

Net revenues increased by 87% year-over-year for the fiscal year 2024, and fourth quarter net revenues were $15.2 million, a 117.3% increase from the same quarter last year.

Significant Increase in Gross Billings

Gross billings grew by 74.4% year-over-year for the fiscal year and by 93.4% in the fourth quarter compared to the same quarter last year, reaching $21.4 million.

Improved Cash Position and Positive Cash Flow

The company delivered a full-year positive operating cash flow of US$5.8 million and ended the fourth quarter with $29.2 million in cash, cash equivalents, and time deposits.

Reduction in Operating and Net Loss

Fourth quarter operating loss was $0.9 million, and net loss attributable to ordinary shareholders was $1.4 million, representing an 80.1% and 75.7% decrease from the same quarter last year, respectively.

Advances from Students

Advances from students were $45.1 million at the end of the fourth quarter, indicating strong customer commitment.

Lowlights

Increased Operating Expenses

Fourth quarter operating expenses increased by 35.6% compared to the same quarter last year, driven by a 40.9% increase in sales and marketing expenses and a 28% increase in general and administrative expenses.

Negative Earnings Per ADS

Q4 GAAP and non-GAAP earnings per ADS were negative $0.24 and $0.2, respectively, indicating the company is still experiencing losses.

Company Guidance

In the fourth quarter of fiscal year 2024, 51Talk Online Education Group reported impressive growth metrics, with gross billings increasing by 93.4% year-over-year to $21.4 million and net revenues rising by 117.3% to $15.2 million. The gross margin stood at 77.5%, reflecting a strong financial performance. Despite operating expenses climbing to $13.4 million, the company managed to significantly reduce its operating loss to $0.9 million, an 80.1% decrease from the previous year, and its net loss attributable to shareholders to $1.4 million, down by 75.7%. The company ended the quarter with $29.2 million in cash, cash equivalents, and time deposits, and advances from students amounted to $45.1 million. Looking ahead, 51Talk projects first-quarter 2025 gross billings between $21.5 million and $22 million, underscoring its optimistic outlook amidst evolving market conditions.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.