New Oriental Current Financial Leverage

EDU -  USA Stock  

USD 2.21  0.72  24.57%

New Oriental's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. New Oriental's financial risk is the risk to New Oriental stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Continue to the analysis of New Oriental Fundamentals Over Time.

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Issuance Repayment of Debt Securities is likely to gain to about 18.5 M in 2021, whereas Total Debt is likely to drop slightly above 1.4 B in 2021.

New Oriental Current Financial Burden

New Oriental's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. New Oriental's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps New Oriental Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect New Oriental's stakeholders.

Asset vs Debt

Equity vs Debt

Given that New Oriental's debt-to-equity ratio measures a company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which New Oriental is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of New Oriental to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, New Oriental is said to be less leveraged. If creditors hold a majority of New Oriental's assets, the company is said to be highly leveraged.

New Oriental Quarterly Debt to Equity Ratio

0.963Share
Given the importance of New Oriental's capital structure, the first step in the capital decision process is for the management of New Oriental to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of New Oriental Education to issue bonds at a reasonable cost.

New Oriental Financial Leverage Rating

New Oriental Education bond ratings play a critical role in determining how much New Oriental have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for New Oriental's borrowing costs.
Overall Bond Rating
Not Rated
Average S&P Rating
N/A
Piotroski F Score
8  Strong
Beneish M Score

New Oriental Education Debt to Cash Allocation

As New Oriental Education follows its natural business cycle, the capital allocation decisions will not magically go away. New Oriental's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company has 2.02 B in debt with debt to equity (D/E) ratio of 0.4, which is OK given its current industry classification. New Oriental Education has a current ratio of 1.97, which is typical for the industry and considered as normal.

New Oriental Accumulated Other Comprehensive Income Over Time

New Oriental Assets Financed by Debt

The debt-to-assets ratio shows the degree to which New Oriental uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

New Oriental Debt Ratio

    
  17.72   
It appears most of the New Oriental's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the New Oriental's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of New Oriental, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a New Oriental debt ratio should be compared their industry average or other competing firms.
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New Oriental Education Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of New Oriental, understanding its historical liability is critical in projecting New Oriental's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how New Oriental uses its financing power over time.

Understaning New Oriental Use of Financial Leverage

New Oriental financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures New Oriental's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of New Oriental assets, the company is considered highly leveraged. Understanding the composition and structure of overall New Oriental debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it.
Please read more on our technical analysis page.
Last ReportedProjected for 2021
Total Debt1.8 B1.4 B
Debt Current345.8 M343.8 M
Debt Non Current1.4 B1.1 B
Issuance Repayment of Debt Securities18 M18.5 M
Debt to Equity Ratio 1.55  1.24 
New Oriental Education Technology Group Inc. provides private educational services under the New Oriental brand in the Peoples Republic of China. The company was founded in 1993 and is headquartered in Beijing, the Peoples Republic of China. New Oriental operates under Education Training Services classification in the United States and is traded on New York Stock Exchange. It employs 69438 people.

New Oriental Investors Sentiment

The influence of New Oriental's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in New Oriental. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.

Current Sentiment - EDU

New Oriental Education Investor Sentiment

Greater number of Macroaxis users are currently bullish on New Oriental Education. What is your trading attitude regarding investing in New Oriental Education? Are you bullish or bearish?
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Bearish
98% Bullish
2% Bearish
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Pair Trading with New Oriental

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if New Oriental position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Oriental will appreciate offsetting losses from the drop in the long position's value.

New Oriental Pair Correlation

Equities Pair Trading Analysis

Correlation analysis and pair trading evaluation for New Oriental and Elite Education Group. Pair trading can be used as a hedging technique within a particular sector or industry or even over random equities to generate better risk-adjusted return
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Continue to the analysis of New Oriental Fundamentals Over Time. Note that the New Oriental Education information on this page should be used as a complementary analysis to other New Oriental's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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When running New Oriental Education price analysis, check to measure New Oriental's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy New Oriental is operating at the current time. Most of New Oriental's value examination focuses on studying past and present price action to predict the probability of New Oriental's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move New Oriental's price. Additionally, you may evaluate how the addition of New Oriental to your portfolios can decrease your overall portfolio volatility.
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The market value of New Oriental Education is measured differently than its book value, which is the value of New Oriental that is recorded on the company's balance sheet. Investors also form their own opinion of New Oriental's value that differs from its market value or its book value, called intrinsic value, which is New Oriental's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because New Oriental's market value can be influenced by many factors that don't directly affect New Oriental Education underlying business (such as pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between New Oriental's value and its price as these two are different measures arrived at by different means. Investors typically determine New Oriental value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, New Oriental's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.