It's been a great morning session for New Oriental Education & Technology investors, who saw their shares rise 1.7% to a price of $96.38 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
New Oriental Education & Technology's Valuation Is in Line With Its Sector Averages:
New Oriental Education & Technology Group Inc. provides private educational services under the New Oriental brand in the People's Republic of China. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 25.55 and an average price to book (P/B) ratio of 2.1. In contrast, New Oriental Education & Technology has a trailing 12 month P/E ratio of 53.5 and a P/B ratio of 4.17.
New Oriental Education & Technology's PEG ratio is 111.14, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,447 | $3,096 | $3,579 | $4,277 | $3,105 | $2,998 |
| Operating Margins | 11% | 10% | 11% | 3% | -32% | 6% |
| Net Margins | 12% | 8% | 12% | 8% | -38% | 6% |
| Net Income (M) | $296 | $238 | $413 | $334 | -$1,188 | $177 |
| Net Interest Expense (M) | n/a | $2 | $5 | $7 | $4 | $1 |
| Depreciation & Amort. (M) | $77 | $110 | $146 | $226 | $192 | $117 |
| Diluted Shares (M) | 159 | 159 | 160 | 1,652 | 1,696 | 1,686 |
| Earnings Per Share | $1.87 | $1.5 | $2.59 | $0.2 | -$0.7 | $0.11 |
| EPS Growth | n/a | -19.79% | 72.67% | -92.28% | -450.0% | 115.71% |
| CAPEX (M) | $214 | $269 | $310 | $429 | $151 | $143 |
| Current Ratio | 1.68 | 1.73 | 1.52 | 1.89 | 2.62 | 1.96 |
New Oriental Education & Technology has weak revenue growth and decreasing reinvestment in the business, weak operating margins with a negative growth trend, and declining EPS growth. On the other hand, the company has a decent current ratio of 1.96 working in its favor.
