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New Oriental Education & Technology (EDU)
NYSE:EDU
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New Oriental Education Tech
(NYSE:EDU)
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Rating:73Outperform
Price Target:
$55.00
▲(7.89% Upside)
New Oriental Education Tech presents a solid financial foundation with strong profitability and effective cash flow management. Technical analysis suggests potential overbought conditions, while valuation metrics indicate fair pricing. The recent earnings call highlighted growth opportunities despite some challenges, leading to an overall balanced outlook.
Positive Factors
Revenue Growth
The significant revenue growth in core educational business indicates strong demand and effective business strategies, supporting long-term expansion.
Investment in AI
Investment in AI enhances educational offerings and operational efficiency, positioning the company as a leader in tech-driven education solutions.
Strong Balance Sheet
A strong balance sheet with low leverage provides financial stability and flexibility to invest in growth opportunities and withstand economic fluctuations.
Negative Factors
Overall Revenue Decrease
A decline in overall revenue suggests challenges in certain segments, which could impact future growth if not addressed effectively.
Increased Operating Costs
Rising operating costs can pressure margins and profitability, necessitating cost control measures to maintain financial health.
Slowdown in Overseas Business
Slower growth in overseas markets due to macroeconomic and geopolitical factors could limit international expansion and revenue diversification.
New Oriental Education Tech (EDU) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.39B
Dividend Yield1.16%
Average Volume (3M)894.30K
Price to Earnings (P/E)22.6
Beta (1Y)0.50
Revenue Growth13.72%
EPS Growth21.23%
CountryUS
Employees67,935
SectorConsumer Defensive
Sector Strength42
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.61
Shares Outstanding163,528,840
10 Day Avg. Volume1,273,791
30 Day Avg. Volume894,303
Financial Highlights & Ratios
PEG Ratio0.59
Price to Book (P/B)3.50
Price to Sales (P/S)3.06
P/FCF Ratio15.75
Enterprise Value/Market Cap0.46
Enterprise Value/Revenue0.79
Enterprise Value/Gross Profit1.42
Enterprise Value/Ebitda6.48
Forecast
1Y Price Target
$63.75Price Target Upside25.05% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
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 Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed financial performance with strong revenue growth in certain segments and new business initiatives, but also highlighted significant challenges such as operating losses and goodwill impairment. The company remains optimistic with strategic investments in AI and a new shareholder return plan, but faces slower growth expectations due to external factors.Q4-2025 Updates
Positive Updates
Revenue Growth Across Segments
Total net revenue increased by 18.7% year-over-year, with significant contributions from new ventures. Overseas test prep business revenue increased by 15%, overseas studies consulting by 8%, and adults and university students business by 17%.
Strong Performance in New Business Initiatives
New educational business initiatives reported a 33% revenue increase year-over-year. Integrated tourism-related business recorded a revenue increase of about 71% year-over-year.
AI Integration and Technological Advancements
Developed AI-powered intelligent learning devices and smart study solutions, enhancing learning outcomes and internal efficiency.
Non-GAAP Financial Improvements
Non-GAAP operating income increased by 116.3% year-over-year, and non-GAAP net income increased by 59.4% year-over-year.
Shareholder Return Plan
Board approved a 3-year shareholder return plan, with at least 50% of net income attributed to shareholder returns through dividends and/or share repurchases.
Negative Updates
Operating Loss and Net Income Decline
Operating loss was $8.7 million compared to operating income of $10.5 million in the same period of the prior fiscal year. Net income attributable to New Oriental decreased by 73.7% year-over-year.
Goodwill Impairment
Impairment of goodwill was $60.3 million, which was a significant change compared to 0 in the same period of the prior fiscal year.
Slower Growth Expectation
Guidance for Q1 of fiscal year 2026 shows conservative revenue growth of 2% to 5%, with acknowledgments of adverse impacts from economic environment and international relations.
Company Guidance
During the fourth quarter of fiscal year 2025, New Oriental reported a strong financial performance. The company's total net revenue, excluding East Buy, increased by 18.7% year-over-year. Its non-GAAP operating margin reached 6.5%, marking a year-over-year improvement of 410 basis points. The overseas test prep business saw a 15% revenue increase, while the overseas studies consulting business rose by 8%. The adults and university students business experienced a 17% revenue growth. New educational initiatives, particularly in non-academic tutoring and intelligence learning systems, reported a 33% revenue increase. The integrated tourism-related business line, which includes study tours and research camps, showed a remarkable 71% revenue growth. Looking ahead to fiscal year 2026, New Oriental expects total net revenue, including East Buy, to range from $5,145.3 million to $5,390.3 million, representing a 5% to 10% year-over-year increase. The company also announced a new three-year shareholder return plan, committing to return at least 50% of net income to shareholders through dividends and/or share repurchases.New Oriental Education Tech Financial Statement Overview
Summary
New Oriental Education Tech demonstrates strong financial performance with significant revenue growth and solid profitability in income statement metrics. The balance sheet shows low leverage and good equity financing, while cash flow management is effective despite a decline in free cash flow 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 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.90B | 4.31B | 3.00B | 3.11B | 4.28B | 3.58B |
| Gross Profit | 2.72B | 2.26B | 1.59B | 1.35B | 2.24B | 1.99B |
| EBITDA | 595.37M | 457.25M | 312.75M | -834.22M | 551.90M | 643.30M |
| Net Income | 371.74M | 309.59M | 177.34M | -1.19B | 334.41M | 413.33M |
Balance Sheet | ||||||
| Total Assets | 7.81B | 7.53B | 6.39B | 6.03B | 10.15B | 6.56B |
| Cash, Cash Equivalents and Short-Term Investments | 4.76B | 4.78B | 4.00B | 4.19B | 6.26B | 3.52B |
| Total Debt | 803.77M | 662.33M | 458.60M | 680.41M | 2.16B | 1.58B |
| Total Liabilities | 3.85B | 3.48B | 2.58B | 2.24B | 5.13B | 3.69B |
| Stockholders Equity | 3.66B | 3.78B | 3.60B | 3.71B | 4.91B | 2.74B |
Cash Flow | ||||||
| Free Cash Flow | 703.33M | 839.25M | 827.96M | -1.43B | 693.74M | 494.91M |
| Operating Cash Flow | 896.59M | 1.12B | 971.01M | -1.28B | 1.13B | 804.46M |
| Investing Cash Flow | -93.43M | -1.15B | -37.41M | 1.17B | -2.18B | -1.26B |
| Financing Cash Flow | -584.97M | -160.44M | -246.87M | -230.86M | 1.65B | -17.86M |
New Oriental Education Tech Technical Analysis
Neutral
50.98
Price Trends
48.62
Positive
48.95
Positive
50.51
Positive
Market Momentum
1.05
Positive
51.14
Neutral
17.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EDU, the sentiment is Neutral. The current price of 50.98 is below the 20-day moving average (MA) of 51.12, above the 50-day MA of 48.62, and above the 200-day MA of 50.51, indicating a neutral trend. The MACD of 1.05 indicates Positive momentum. The RSI at 51.14 is Neutral, neither overbought nor oversold. The STOCH value of 17.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | 5.93B | 25.60 | 30.40% | ― | 6.52% | 11.72% | |
75 Outperform | 6.75B | 65.27 | 2.25% | ― | 48.03% | 97.15% | |
73 Outperform | $8.39B | 22.55 | 10.00% | 1.16% | 13.72% | 21.23% | |
69 Neutral | 6.31B | 24.03 | 19.46% | ― | 17.90% | 39.75% | |
58 Neutral | 1.11B | 34.69 | -3.84% | ― | -1.66% | ― | |
52 Neutral | 826.06M | -8.85 | -54.25% | ― | 56.38% | -16.84% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% |
* Consumer Defensive Sector Average
Performance Comparison
EDU
New Oriental Education Tech
50.98
-20.04
-28.22%
LOPE
Grand Canyon Education
211.17
68.52
48.03%
LRN
Stride
144.61
60.81
72.57%
TAL
TAL Education Group
11.09
0.81
7.88%
GOTU
Gaotu Techedu
3.40
-0.31
-8.36%
DAO
Youdao
9.27
5.77
164.86%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.