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New Oriental Education & Technology (EDU)
:EDU
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New Oriental Education Tech
(NYSE:EDU)
Rating:75Outperform
Price Target:
$54.00
▲( 16.25% Upside)
Positive Factors
Financial Performance
Core revenue growth was robust, exceeding expectations with a 21% year-over-year increase.
Profitability
The company is focusing on margin stability by optimizing resources and moderating offline expansion.
Negative Factors
Earnings Estimates
Earnings estimates for fiscal years 2025, 2026, and beyond have been significantly reduced due to lower operational profit margins.
Guidance
Management provided weak guidance for the third quarter, impacted by slower growth in overseas test preparation and new business ventures.
Revenue Growth
Overseas revenue growth was weaker than expected, affecting margin assumptions.
New Oriental Education Tech (EDU) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.62B
Dividend YieldN/A
Average Volume (3M)1.18M
Price to Earnings (P/E)19.6
Beta (1Y)0.60
Revenue Growth18.73%
EPS Growth26.72%
CountryUS
Employees67,935
SectorTechnology
Sector Strength77
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.70
Shares Outstanding163,528,840
10 Day Avg. Volume656,364
30 Day Avg. Volume1,180,374
Financial Highlights & Ratios
PEG Ratio-1.53
Price to Book (P/B)0.21
Price to Sales (P/S)0.00
P/FCF Ratio1.09
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$68.10Price Target Upside46.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
New Oriental Education Tech Business Overview & Revenue Model
Company DescriptionNew Oriental Education & Technology Group Inc. provides private educational services under the New Oriental brand in the People's Republic of China. It operates through K-12 AST, Test Preparation and Other Courses; Online Education; and Others segments. The company offers test preparation courses to students taking language and entrance exams used by educational institutions in the United States, the People's Republic of China, and the Commonwealth countries; and after-school tutoring courses for middle and high school students to enhance their exam scores, as well as for children to teach English. It also provides language training courses, including English, as well as other foreign languages, such as German, Japanese, French, Korean, Italian, and Spanish; operates a full-time private primary and secondary school in Yangzhou seeking a full curriculum with a focus on English; develops and edits educational materials for language training and test preparation; and offers online education programs that include college, K-12, and pre-school education. In addition, the company offers overseas studies consulting and overseas study tour services. As of May 31, 2021, it offered educational programs, services, and products to students through a network of 122 schools, 1,547 learning centers, and 11 bookstores, as well as through its online learning platforms. The company was founded in 1993 and is headquartered in Beijing, the People's Republic of China.
How the Company Makes MoneyNew Oriental Education & Technology Group Inc. generates revenue primarily through tuition fees collected from its educational programs and services. The company offers a wide range of courses, from K-12 tutoring and test preparation to language training and international study consulting. A significant portion of its revenue comes from its language training and test preparation services, which are in high demand due to China's competitive educational environment. Additionally, New Oriental has expanded its online education platform, which has become a crucial revenue stream, especially in light of increased demand for remote learning solutions. The company also earns income from the sale of educational materials and software, as well as through partnerships with other educational institutions and technology firms. These diverse revenue streams allow New Oriental to maintain a strong financial position in the private education sector.
New Oriental Education Tech Financial Statement Overview
Summary
New Oriental Education Tech is showing a favorable financial trajectory with strong profitability and stable financial health. The income statement reveals impressive growth and margin improvement, while the balance sheet indicates a low-leverage, equity-strong structure. Cash flow management is effective, though declining free cash flow growth suggests areas for potential improvement. Overall, the company is well-positioned in the education sector, with a solid financial foundation for future growth.Income Statement
The income statement reflects a strong recovery with significant revenue growth of 11.13% in the TTM, after a previous decline. Gross Profit Margin stands at 55.06% and Net Profit Margin at 8.17%, both indicators of solid profitability within the education sector. The EBIT and EBITDA margins are 9.34% and 10.30% respectively, showing efficient operations. The company has improved its financial performance considerably compared to the challenging fiscal 2022.85
Very Positive
Balance Sheet
The balance sheet showcases a stable financial position with an Equity Ratio of 49.49%, indicative of strong equity financing. The Debt-to-Equity Ratio is 0.20, reflecting low leverage. Return on Equity (ROE) is at 10.62%, marking a healthy return for shareholders. The company's asset base has grown while managing liabilities effectively, maintaining a robust equity position.78
Positive
Cash Flow
Cash flows indicate solid management of liquidity with a Free Cash Flow to Net Income Ratio of 1.80, demonstrating efficient cash conversion. Operating Cash Flow to Net Income Ratio is 2.23, highlighting strong cash-generating capability. However, the Free Cash Flow Growth Rate is -16.00%, signaling a reduction compared to the previous period, which may need monitoring.75
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.79B | 4.31B | 3.00B | 3.11B | 4.28B | 3.58B | Gross Profit |
| 2.64B | 2.26B | 1.59B | 1.35B | 2.24B | 1.99B | EBIT |
| 447.45M | 350.43M | 190.05M | -982.51M | 394.01M | 266.45M | EBITDA |
| 493.68M | 457.25M | 312.75M | -834.22M | 551.90M | 643.30M | Net Income Common Stockholders |
| 391.59M | 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 | ||||
| 705.01M | 839.25M | 827.96M | -1.43B | 693.74M | 494.91M | Operating Cash Flow |
| 874.30M | 1.12B | 971.01M | -1.28B | 1.13B | 804.46M | Investing Cash Flow |
| -869.15M | -1.15B | -37.41M | 1.17B | -2.18B | -1.26B | Financing Cash Flow |
| -595.72M | -160.44M | -246.87M | -230.86M | 1.65B | -17.86M |
New Oriental Education Tech Technical Analysis
Negative
46.45
Price Trends
47.29
Negative
49.83
Negative
57.07
Negative
Market Momentum
0.14
Positive
44.02
Neutral
20.48
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 46.45 is below the 20-day moving average (MA) of 48.32, below the 50-day MA of 47.29, and below the 200-day MA of 57.07, indicating a bearish trend. The MACD of 0.14 indicates Positive momentum. The RSI at 44.02 is Neutral, neither overbought nor oversold. The STOCH value of 20.48 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.49B | 24.30 | 29.85% | ― | 6.31% | 11.24% | |
81 Outperform | $6.85B | 24.34 | 23.76% | ― | 14.90% | 60.56% | |
75 Outperform | $7.62B | 19.58 | 10.36% | ― | 18.73% | 26.72% | |
72 Outperform | $6.55B | 78.75 | 2.28% | ― | 55.62% | ― | |
61 Neutral | $906.24M | ― | -36.29% | ― | 58.34% | -602.43% | |
61 Neutral | $11.29B | 10.07 | -7.05% | 2.96% | 7.47% | -10.75% | |
60 Neutral | $1.08B | 52.99 | 25.15% | ― | -2.04% | ― |
* Technology Sector Average
Performance Comparison
EDU
New Oriental Education Tech
46.45
-30.92
-39.96%
LOPE
Grand Canyon Education
194.17
48.71
33.49%
LRN
Stride
153.00
82.09
115.77%
TAL
TAL Education Group
10.99
-0.44
-3.85%
GOTU
Gaotu Techedu
3.72
-2.51
-40.29%
DAO
Youdao
9.26
5.59
152.32%
New Oriental Education Tech Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q3-2025)
| % Change Since: 4.64%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. While there is notable growth in specific segments like the integrated tourism-related business and investments in AI, the overall revenue decrease and challenges in overseas markets dampen the positive aspects. The financial performance shows both progress and areas needing improvement, with a balanced outlook for the future.Q3-2025 Updates
Positive Updates
Revenue Growth in Core Educational Business
Despite an overall revenue decrease of 2%, the net revenue excluding Eastbuy increased by 21.2% year over year, driven by new ventures.
Strong Performance in Integrated Tourism-Related Business
The integrated tourism-related business recorded an exceptional revenue increase of 85% year over year for the quarter.
Investment in AI-Powered Education Solutions
New Oriental invested $29.7 million in AI integration for education solutions, enhancing student outcomes and operational efficiency.
Share Repurchase Program
The share repurchase program was extended and increased to $700 million, with $695.5 million already repurchased.
Steady Growth Across Various Business Lines
The overseas study consulting business increased by 21%, and the adults and university students business increased by 17% year over year.
Negative Updates
Decrease in Overall Revenue
Overall revenue decreased by 2% year over year, indicating challenges in specific segments.
Increased Operating Costs in Certain Areas
Selling and marketing expenses increased by 13.13%, and G&A expenses increased by 19.8% year over year.
Slowdown in Overseas-Related Business
The overseas-related business is expected to grow only by 5% to 10% in the upcoming quarter due to macroeconomic and international relation challenges.
Non-GAAP Income Decrease
Non-GAAP net income decreased by 14.3% year over year, pointing to financial pressures in the quarter.
Company Guidance
During the third fiscal quarter of 2025 earnings call, guidance for the next quarter was provided by Stephen Yang, Executive President and CFO of New Oriental Education & Technology Group Inc. They forecasted that the total net revenue, excluding Eastbuy, is expected to be between $1,009.1 million and $1,036.6 million, representing a year-over-year increase of 10% to 13%. The projected revenue growth in RMB is expected to be 12% to 15%. The guidance also highlighted a focus on cost control and efficiency enhancements, initiated in the current quarter, which are anticipated to positively impact the non-GAAP operating margin of the educational business in the fourth quarter. The company remains optimistic about achieving sustainable growth through strategic investments, especially in AI and technology integration.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.