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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:78Outperform
Price Target:
$64.00
▲(6.00% Upside)
The score is driven primarily by strong financial performance and a constructive earnings update (raised guidance, significant profitability/margin expansion, and strong cash generation). Offsetting factors include only neutral-to-mixed technical momentum and a valuation that is reasonable but not clearly cheap, with some operating-risk callouts (overseas softness and higher G&A/share-based compensation).
Positive Factors
Strong cash generation & liquidity
Robust operating cash and large liquid balances provide durable financial flexibility to fund growth initiatives, buybacks/dividends and AI/OMO investments without needing external financing. This reduces refinancing risk and supports sustained investment in product and geographic expansion.
Margin expansion and operating efficiency
Substantial margin improvement reflects sustainable cost discipline and operating leverage across sales, service and delivery. If maintained, higher margins improve free cash flow conversion and enable reinvestment in higher-return initiatives while buffering profitability against cyclical headwinds.
Multiple durable growth engines (K‑12, new initiatives, deferred revenue)
Acceleration in K‑12 and new education initiatives plus rising deferred revenue signal diversified, higher‑visibility revenue streams. This mix reduces reliance on cyclical adult test prep, expands addressable market, and provides a backlog that supports predictable recognized revenue over coming quarters.
Negative Factors
Overseas business softness
Slower overseas growth constrains geographic diversification and makes overall revenue more dependent on China domestic recovery. Prolonged weakness abroad could limit total company growth, reduce scale benefits, and force reallocation of capital back to domestic markets where competition and regulation differ.
Rising G&A and share‑based compensation
Material increases in G&A and equity compensation can structurally raise the cost base and pressure margin sustainability if they persist. Higher recurring overhead reduces incremental profitability from growth, and equity expense dilutes cash returns to shareholders absent offsetting productivity gains.
Revenue concentration in top cities
High concentration in top‑tier cities increases exposure to local demand shifts, policy changes or competitive moves, limiting scalable national growth. Reliance on a few population centers reduces resilience and makes future expansion more costly if management must deeply penetrate lower‑tier markets.
New Oriental Education Tech (EDU) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.17B
Dividend Yield1.03%
Average Volume (3M)802.07K
Price to Earnings (P/E)25.4
Beta (1Y)0.66
Revenue Growth7.22%
EPS Growth-2.84%
CountryUS
Employees67,935
SectorConsumer Defensive
Sector Strength42
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.45
Shares Outstanding163,528,840
10 Day Avg. Volume1,308,565
30 Day Avg. Volume802,071
Financial Highlights & Ratios
PEG Ratio0.98
Price to Book (P/B)2.09
Price to Sales (P/S)1.57
P/FCF Ratio12.04
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue1.78
Enterprise Value/Gross Profit3.23
Enterprise Value/Ebitda13.64
Forecast
1Y Price Target
$72.08Price Target Upside19.38% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 generates revenue primarily through tuition fees for its educational programs and services. Key revenue streams include fees from language training courses, test preparation classes, and K-12 tutoring services. The company also earns money from the sale of educational materials and books. Additionally, New Oriental has developed online learning platforms that have expanded its reach and allowed for the monetization of digital content. Significant partnerships with educational institutions and technology companies have further enhanced its offerings and contributed to its revenue growth.
New Oriental Education Tech Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call presented a clear improvement in revenue, strong operating and non-GAAP profit growth, margin expansion, solid cash generation, and an upward revision to full-year guidance — driven by K-12 acceleration, new education initiatives, AI/OMO investments, and Eastbay recovery. Offsetting these positives are modest weakness and headwinds in parts of the overseas business, rising G&A and share-based compensation, and concentration of growth in top cities. Overall, the positive operational momentum and improved profitability and guidance outweighed the challenges discussed.Q2-2026 Updates
Positive Updates
Top-line Growth
Total net revenue grew 14.7% year over year to $1.19 billion for Q2 FY2026, reflecting broad-based recovery and acceleration in core segments.
Strong Profitability Expansion
Non-GAAP operating income rose 206.9% year over year to $89.1 million; GAAP operating income was $66.3 million, up 244.4% year over year. Management also reported non-GAAP operating margin improvement of more than four percentage points (management cited ~470 bps of expansion).
Non-GAAP Net Income Growth
Non-GAAP net income attributable to New Oriental increased 68.6% year over year to $72.9 million; non-GAAP basic/diluted net income per ADS were $0.46 and $0.45, respectively.
Improved Cash Generation and Strong Liquidity
Net cash flow generated from operations was approximately $323.5 million for the quarter. Cash and cash equivalents were $1.8429 billion, with $161.6 million in term deposits and $1.8752 billion in short-term investments.
Raised Full-Year Guidance
Management raised full fiscal year 2026 total net revenue guidance to $5.2923 billion–$5.4883 billion, representing an 8%–12% year-over-year increase; quarter/near-term revenue range of $1.3132 billion–$1.3487 billion (11%–14% YoY) was also provided.
K-12 and New Education Initiatives Gaining Traction
K-9/new educational and high school tutoring businesses reported accelerated YoY revenue growth; management expects K-12 growth of ~20%+ YoY in Q3. Revenue from new education initiatives (non-academic tutoring, intelligent learning systems & devices) grew 22% YoY this quarter.
Eastbay (Easter buy) Recovery and Product Expansion
Eastbay refocused product mix and supply chain, expanded private-label SKUs to 801 SPUs across many categories, reported profitable vending-machine pilots in select cities, and is contributing to both top-line and bottom-line recovery with plans to scale nationwide.
Cost Discipline and Efficiency Gains
Selling and marketing expenses decreased 1.1% YoY to $194.1 million; management highlighted better utilization, operating leverage, cross-department customer-service integration and marketing efficiency contributing to margin expansion.
Shareholder Returns and Buyback
Board approved ordinary dividend of $0.12 per common share ($1.20 per ADS) with the first installment paid; share repurchase program authorized up to $300 million and ~1.6 million ADS repurchased for ~$86.3 million to date.
Deferred Revenue Growth (Prepaid/Backlog)
Deferred revenue increased 10.2% year over year to $2.1615 billion, indicating healthy upfront enrollments/prepaid services that support future recognized revenue.
Negative Updates
Overseas Business Softness
Overseas-related business faced macroeconomic headwinds: overseas test prep grew modestly by 4% YoY while overseas study consulting declined about 3% YoY; management expects flattish to low-single-digit growth in the near term.
Rising Operating Costs in Specific Areas
Total operating costs and expenses rose 10.4% YoY to $1.1251 billion and cost of revenues increased 11.8% YoY to $556.9 million, exerting cost pressure despite margin improvement from efficiency initiatives.
Higher G&A and Share-Based Compensation
General & administrative expenses increased 15.2% YoY to $374.3 million. Share-based compensation allocated to operating costs rose sharply by 156.8% to $21.4 million, representing a notable headwind to near-term operating expense trends.
Incomplete / Unspecified Segment Detail
Some segment details were vague or missing (e.g., the adults and university students business reported 'recorded a revenue increase of percent year over year' with the percentage omitted), reducing clarity for investors on certain lines.
Dependency on Concentrated City Revenue
New initiatives and certain businesses remain concentrated in top-tier cities (top 10 cities contributed over 60% of some revenues and over 50% of device/OMO business), which may limit near-term geographic diversification and expose results to localized demand shifts.
Company Guidance
Management raised its FY2026 outlook, guiding full‑year total net revenue to $5.2923–$5.4883 billion (up 8–12% YoY) and also citing a group revenue range of $1.3132–$1.3487 billion (up 11–14% YoY) for the 2026 fiscal year period referenced; they expect K‑12 to grow roughly 20%+ (Q3 view) while overseas is likely to be flattish to low single digits after Q2 results of overseas test‑prep +4% YoY and overseas study‑consulting ≈‑3% YoY, new education initiatives grew 22% YoY this quarter, and management reiterated focus on cost discipline, measured capacity expansion (deeper penetration in high‑performing cities not aggressive openings), continued investment in AI and OMO (Q2 OMO spend $28.4M), commitment to sustainable profitability, and shareholder returns including an ordinary dividend of $0.12 per common share ($1.20 per ADS) with the first installment paid and a $300M buyback authorization (≈1.6M ADS repurchased for ~$86.3M to date).New Oriental Education Tech Financial Statement Overview
Summary
Strong overall fundamentals supported by healthy profitability (55.45% gross margin; 7.60% net margin), solid operating efficiency (EBITDA margin 12.15%), conservative leverage (debt-to-equity 0.22), and strong cash generation (free cash flow +24.53%; operating cash flow to net income 2.41).Income Statement
New Oriental Education Tech has demonstrated strong revenue growth, with a 2.22% increase in the latest year. The gross profit margin is robust at 55.45%, indicating efficient cost management. Net profit margin improved to 7.60%, reflecting enhanced profitability. The EBIT and EBITDA margins are healthy at 9.97% and 12.15%, respectively, showcasing operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is solid, with a low debt-to-equity ratio of 0.22, indicating conservative leverage. Return on equity is satisfactory at 10.17%, suggesting effective use of equity. The equity ratio stands at 46.91%, highlighting a strong equity base relative to total assets.78
Positive
Cash Flow
Cash flow performance is strong, with a 24.53% growth in free cash flow, indicating improved cash generation. The operating cash flow to net income ratio is 2.41, showing robust cash flow relative to earnings. The free cash flow to net income ratio is 0.71, reflecting efficient cash conversion.82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.99B | 4.90B | 4.31B | 3.00B | 3.11B | 4.28B |
| Gross Profit | 2.75B | 2.72B | 2.26B | 1.59B | 1.35B | 2.24B |
| EBITDA | 651.65M | 595.37M | 457.25M | 312.75M | -834.22M | 551.90M |
| Net Income | 367.45M | 372.44M | 309.59M | 177.34M | -1.19B | 334.41M |
Balance Sheet | ||||||
| Total Assets | 8.01B | 7.81B | 7.53B | 6.39B | 6.03B | 10.15B |
| Cash, Cash Equivalents and Short-Term Investments | 4.67B | 4.58B | 4.78B | 4.00B | 4.19B | 6.26B |
| Total Debt | 784.05M | 803.78M | 662.33M | 458.60M | 680.41M | 2.16B |
| Total Liabilities | 3.75B | 3.85B | 3.48B | 2.58B | 2.24B | 5.13B |
| Stockholders Equity | 3.95B | 3.66B | 3.78B | 3.60B | 3.71B | 4.91B |
Cash Flow | ||||||
| Free Cash Flow | 737.23M | 637.38M | 839.25M | 827.96M | -1.43B | 693.74M |
| Operating Cash Flow | 905.70M | 896.59M | 1.12B | 971.01M | -1.28B | 1.13B |
| Investing Cash Flow | -249.98M | -93.43M | -1.15B | -37.41M | 1.17B | -2.18B |
| Financing Cash Flow | -460.91M | -584.97M | -160.44M | -246.87M | -230.86M | 1.65B |
New Oriental Education Tech Technical Analysis
Positive
60.38
Price Trends
55.03
Positive
54.66
Positive
51.14
Positive
Market Momentum
0.84
Negative
63.59
Neutral
58.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EDU, the sentiment is Positive. The current price of 60.38 is above the 20-day moving average (MA) of 57.23, above the 50-day MA of 55.03, and above the 200-day MA of 51.14, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 63.59 is Neutral, neither overbought nor oversold. The STOCH value of 58.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $10.17B | 25.43 | 10.05% | 1.03% | 7.22% | -2.84% | |
76 Outperform | $3.60B | 12.87 | 22.26% | ― | 17.25% | 30.15% | |
70 Outperform | $7.69B | 26.08 | 7.68% | ― | 44.37% | 146.96% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
61 Neutral | $1.02B | -21.30 | -7.43% | ― | 8.10% | 43.35% | |
55 Neutral | $1.24B | 63.11 | ― | ― | -1.51% | 155.73% | |
49 Neutral | $550.48M | -10.62 | -21.21% | ― | 48.81% | 61.64% |
* Consumer Defensive Sector Average
EDU
New Oriental Education Tech
60.38
12.06
24.96%
LRN
Stride
84.60
-53.06
-38.54%
TAL
TAL Education Group
12.70
0.28
2.25%
GOTU
Gaotu Techedu
2.26
0.12
5.61%
DAO
Youdao
10.40
2.35
29.19%
COUR
Coursera
6.06
-1.75
-22.41%
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.