Essential Information for Investors – Analyzing EDU Stock

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.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.