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New Oriental Education & Technology (EDU)
:EDU
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New Oriental Education Tech
(NYSE:EDU)
74Outperform
Positive Factors
Market Share
New Oriental is still gaining market share.
Regulatory Environment
The Draft Measures on Private Education shouldn't impact EDU's existing business and is positive due to a clarified approval process.
Negative Factors
Earnings Guidance
Management gave weak guidance for 3QF25, mainly hampered by slower-than-expected growth in overseas test prep, new businesses, and cultural tourism.
Financial Performance
Earnings estimates are significantly reduced for F25, F26, and beyond due to lower core operational profit margins.
Revenue Growth
Macro uncertainty to impact revenue growth.
New Oriental Education Tech (EDU) vs. S&P 500 (SPY)
Market Cap
$8.01B
Dividend YieldN/A
Average Volume (3M)1.86M
Price to Earnings (P/E)20.0
Beta (1Y)0.80
Revenue Growth34.42%
EPS Growth28.54%
CountryUS
Employees75,005
SectorTechnology
Sector Strength45
IndustryEducation
Share Statistics
EPS (TTM)2.36
Shares Outstanding163,528,840
10 Day Avg. Volume1,391,952
30 Day Avg. Volume1,858,419
Financial Highlights & Ratios
PEG Ratio0.70
Price to Book (P/B)N/A
Price to Sales (P/S)1.86
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 Target
$57.37Price Target Upside21.47% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
New Oriental Education Tech Business Overview & Revenue Model
Company DescriptionChina-based New Oriental Education & Technology Group, Inc. provides private educational services under the New Oriental brand in the People's Republic of China. It operates through the K-12 AST, Test Preparation and Other Courses, and Others segments.
How the Company Makes MoneyNew Oriental Education Tech generates revenue primarily through tuition fees for its various educational services. The company's key revenue streams include language training programs, which encompass English and other foreign language courses, as well as test preparation services for exams such as the GRE, GMAT, TOEFL, and IELTS. Additionally, New Oriental offers K-12 after-school tutoring services, which contribute significantly to its earnings. The company also benefits from its online education platforms, which have expanded its reach and facilitated growth in digital learning amidst increasing demand for online education. Partnerships with educational content providers and technology firms further bolster its revenue by enhancing the quality and accessibility of its offerings.
New Oriental Education Tech Financial Statement Overview
Summary
New Oriental Education Tech exhibits a robust financial position with strong revenue growth, high profitability margins, and solid cash flow management. The company has effectively managed to improve its financial health after a challenging period, reflecting resilience and strategic adaptation in the education industry.Income Statement
New Oriental Education Tech has demonstrated strong revenue growth with a 60.72% increase in TTM compared to the previous year. The company also shows solid profitability with a gross profit margin of approximately 52.90% and a net profit margin of 8.13% in the TTM period. The EBIT margin stands at 9.06%, indicating efficient operations. However, the previous year experienced negative EBIT and net income, highlighting past volatility.85
Very Positive
Balance Sheet
The company's balance sheet reflects a healthy equity position with an equity ratio of approximately 48.45%. The Debt-to-Equity ratio is low at 0.20, indicating low financial leverage. Return on Equity (ROE) is 10.58% in the TTM period, showing a reasonable return for shareholders. The improving equity and low leverage suggest financial stability, though past liabilities were significantly high.78
Positive
Cash Flow
Strong cash flow management is evident with a positive free cash flow growth rate and an operating cash flow to net income ratio of 2.51 in the TTM period. The free cash flow to net income ratio is 1.87, indicating efficient cash conversion. Although previous periods saw negative cash flows, recent trends show significant improvement.82
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.82B | 4.31B | 3.00B | 3.11B | 4.28B | 3.58B | Gross Profit |
| 2.55B | 2.26B | 1.59B | 1.35B | 2.24B | 1.99B | EBIT |
| 436.36M | 350.43M | 190.05M | -982.51M | 394.01M | 266.45M | EBITDA |
| 482.60M | 457.25M | 312.75M | -834.22M | 551.90M | 643.30M | Net Income Common Stockholders |
| 391.50M | 309.59M | 177.34M | -1.17B | 231.39M | 413.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 4.71B | 4.78B | 4.00B | 4.19B | 6.26B | 3.52B | Total Assets |
| 7.63B | 7.53B | 6.39B | 6.03B | 10.15B | 6.56B | Total Debt |
| 722.83M | 662.33M | 458.60M | 680.41M | 2.16B | 1.58B | Net Debt |
| -695.38M | -727.03M | -1.20B | -468.23M | 550.08M | 664.99M | Total Liabilities |
| 3.65B | 3.48B | 2.58B | 2.24B | 5.13B | 3.69B | Stockholders Equity |
| 3.70B | 3.78B | 3.60B | 3.71B | 4.91B | 2.74B |
| Cash Flow | Free Cash Flow | ||||
| 733.38M | 839.25M | 827.96M | -1.43B | 693.74M | 494.91M | Operating Cash Flow |
| 982.78M | 1.12B | 971.01M | -1.28B | 1.13B | 804.46M | Investing Cash Flow |
| -937.75M | -1.15B | -37.41M | 1.17B | -2.18B | -1.26B | Financing Cash Flow |
| -534.63M | -160.44M | -246.87M | -230.86M | 1.65B | -17.86M |
New Oriental Education Tech Technical Analysis
Negative
47.23
Price Trends
52.67
Negative
57.05
Negative
64.05
Negative
Market Momentum
-1.25
Negative
42.30
Neutral
61.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EDU, the sentiment is Negative. The current price of 47.23 is below the 20-day moving average (MA) of 49.83, below the 50-day MA of 52.67, and below the 200-day MA of 64.05, indicating a bearish trend. The MACD of -1.25 indicates Negative momentum. The RSI at 42.30 is Neutral, neither overbought nor oversold. The STOCH value of 61.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EDU.
New Oriental Education Tech Risk Analysis
New Oriental Education Tech disclosed 82 risk factors in its most recent earnings report. New Oriental Education Tech reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
New Oriental Education Tech Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $8.01B | 20.04 | 10.40% | ― | 34.42% | 28.54% | |
72 Outperform | $7.93B | 67.44 | 3.23% | ― | 55.62% | ― | |
58 Neutral | $21.35B | 9.96 | -19.72% | 2.38% | 5.03% | -22.83% | |
55 Neutral | $114.43M | ― | 180.24% | ― | 70.56% | 9.71% | |
53 Neutral | $994.40M | 85.60 | 25.15% | ― | 5.51% | ― | |
42 Neutral | $43.25M | ― | -96.68% | ― | -15.92% | -164.65% |
* Technology Sector Average
Performance Comparison
EDU
New Oriental Education Tech
47.23
-46.69
-49.71%
COE
China Online Education Group
20.00
13.44
204.88%
TAL
TAL Education Group
13.01
0.28
2.20%
BEDU
Bright Scholar Education Holdings
1.50
-0.70
-31.82%
DAO
Youdao
8.26
3.77
83.96%
LXEH
Lixiang Education Holding Co
9.20
-40.50
-81.49%
New Oriental Education Tech Earnings Call Summary
Earnings Call Date: Jan 21, 2025 | % Change Since: -22.37% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with significant revenue growth and success in new business ventures such as the tourism-related and educational segments. However, challenges included a decrease in operating income, macroeconomic impacts, and increased operating costs leading to margin pressures. The sentiment remains cautious due to these mixed factors, despite strong financial positioning and strategic initiatives like share repurchases and dividends.Highlights
Strong Revenue Growth
Total net revenues increased by 31.3% year-over-year, with an overall revenue growth of 19.4% year-over-year.
New Business Ventures Success
New education business initiatives recorded a revenue increase of about 43% year-over-year.
Overseas Study Consulting and Adults Business Growth
Overseas study consulting and adults/university students business recorded revenue increases of 31% and 35% year-over-year, respectively.
Tourism Related Business Surge
Tourism-related business line, including study tours and research campuses, recorded a revenue increase of 233% year-over-year.
Share Repurchase and Dividend
Board approved a share repurchase program extended to May 2025, increasing from $400 million to $700 million, with $542.8 million already repurchased. A special dividend of $0.06 per share was also distributed.
Healthy Financial Position
The company holds approximately $4.8 billion in cash and cash equivalents, term deposits, and short-term investments.
Lowlights
Operating Income Decline
Operating income decreased by 9.8% year-over-year, and non-GAAP income from operations decreased by 45.8% year-over-year.
Macroeconomic Impact
Macroeconomic uncertainties impacted the high-end education business, leading to a conservative revenue growth forecast for Q3.
Overseas Test Prep Business Slowdown
Revenue growth for overseas test prep business slowed to around 15% due to macroeconomic conditions.
Increased Operating Costs
Operating cost expenses increased by 20.2% year-over-year, primarily due to capacity expansion and new business integration.
Margin Pressure
Faced margin pressure in the second half of the year due to overseas-related business and newly integrated tourism business.
Company Guidance
During the Q2 2025 earnings call, New Oriental provided detailed guidance and performance metrics for their upcoming quarter. The company expects total net revenue, excluding East Buy, to be between $1,007.3 million and $1,032.5 million, reflecting an 18% to 21% year-over-year increase in USD terms and a 20% to 23% increase in RMB terms. New Oriental is managing capacity expansion and hiring with a strategic focus on cities with strong local economies while continuing to invest in emerging tourism-related ventures. The company aims for a balance between revenue growth and operating efficiency, projecting a 25% year-over-year revenue increase in RMB terms for the full year. Despite macroeconomic uncertainties affecting high-end educational services, New Oriental remains committed to enhancing its offerings and leveraging advanced technologies to drive growth and operational efficiency.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.