New Oriental Education, a leading player in the Education & Training Services industry, has seen its stock rise recently, prompting investors to question if there's more room for growth. The company's strong
fundamentals suggest potential for further upside. With a market capitalization of $12B and a current valuation of $7.84B, the company's
financial health is robust. Its current ratio stands at 2.59X, indicating a healthy balance sheet. The company's net assets are valued at $6.39B, with cash and short-term investments amounting to $4B. Despite an investment loss of $37.4M, the company managed to generate a net income of $235.4M, thanks to a gross profit of $1.6B. The PEG ratio of 1.0963 suggests that the stock is reasonably priced given its earnings growth rate. Analysts' overall consensus is a 'Strong Buy', further bolstering the case for potential upside. However, investors should also consider the possible downside price of $67.26. Currently, New Oriental's Enterprise Value over EBITDA remains relatively stable compared to the previous year. The Free Cash Flow per Share is projected to increase to 4.81 in 2024, while Earnings Before Tax are expected to slightly exceed $193.3 million in the same year. If you have been tracking New Oriental, you might be contemplating a purchase. Let's examine whether the stable fundamental indicators will continue to drive price gains for New Oriental's private investors. Will these private investors maintain their holdings, or should we anticipate a sell-off?
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include New Oriental income statement, its balance sheet, and the statement of cash flows. Potential New Oriental investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although New Oriental investors may use each financial statement separately, they are all related. The changes in New Oriental's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on New Oriental's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of New Oriental
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of New Oriental performance into the future periods or doing a reasonable stock valuation. The intrinsic value of New Oriental shares is the value that is considered the true value of the share. If
the intrinsic value of New is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares New Oriental. Please read more on our
fundamental analysis page.
How effective is New Oriental in utilizing its assets?
New Oriental Education reports assets on its Balance Sheet. It represents the amount of New resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, New Oriental aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Diversified Consumer Services space. To get a better handle on how balance sheet or income statements item affect New volatility, please check the breakdown of all its
fundamentals.
Are New Oriental Earnings Expected to grow?
The
future earnings power of New Oriental involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of New Oriental factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. New Oriental
stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of New
expected earnings.
And What about dividends?
A dividend is the distribution of a portion of New Oriental earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. New Oriental dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. New one year expected dividend income is about USD0.2 per share.
At this time, New Oriental's
Dividend Payout Ratio is comparatively stable compared to the past year.
Dividend Paid And Capex Coverage Ratio is likely to gain to 4.22 in 2024, whereas
Dividends Paid is likely to drop slightly above 11
M in 2024.
Investing in stocks that pay
dividends, such as stock of New Oriental Education, is one of many strategies that are good for long-term investments. Ex-dividend dates are significant because investors in New Oriental must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for New Oriental. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.
New Oriental Gross Profit
New Oriental Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing New Oriental previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show New Oriental Gross Profit growth over the last 10 years. Please check New Oriental's
gross profit and other
fundamental indicators for more details.
Is New Oriental valued wisely by the market?
New Oriental Education reported the last year's revenue of 3
B. Total Income to common stockholders was 235.36
M with profit before taxes, overhead, and interest of 1.35
B.
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence New Oriental's decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over New Oriental's decisions due to their larger holdings.
| 2021 | 2022 | 2023 | 2024 (projected) |
Interest Expense | 4.1M | 707K | 636.3K | 653.0K | Gross Profit | 1.4B | 1.6B | 1.8B | 1.7B |
Asset Utilization
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. New Oriental has an asset utilization ratio of 46.9 percent. This implies that the Company is making $0.47 for each dollar of assets. An increasing asset utilization means that New Oriental Education is more efficient with each dollar of assets it utilizes for everyday operations.
| Current Assets4.4 B | Assets Non Current2 B | | |
| Current Assets | 4.43 Billion | 67.01 |
| Assets Non Current | 1.96 Billion | 29.61 |
| Goodwill | 166.28 Million | 2.51 |
| Tax Assets | 57.56 Million | 0.87 |
As Benjamin Franklin once said, an investment in knowledge pays the best interest. New Oriental Education, a leading player in the Education & Training Services industry, is a testament to this wisdom. The company's strong
fundamentals are reflected in its robust cash flow from operations of $971.01 million and a healthy end period cash flow of $1.8 billion. With a net asset value of $6.39 billion and a return on assets of 3.12%, the company's
financial health is evident. The stock's beta of 0.6 indicates lower volatility compared to the market, making it a relatively safer bet in turbulent times. Furthermore, the company's price to sales ratio stands at 3.58X, which is reasonable given its strong revenue of $3 billion. However, investors should note the company's trailing PE of 45.0625, which is relatively high, indicating that the stock may be overvalued. Despite this, the company's strong
fundamentals and stable cash flows suggest potential for further upside.
Can New Oriental build up on the newest gain?
The downside deviation of New Oriental Education has recently declined to 2.91, suggesting a potential decrease in volatility. This could indicate a period of stability for the company's stock, potentially providing a robust foundation to build on its recent gains. Investors should closely monitor the situation, as a less volatile environment could make New Oriental Education's stock a more appealing investment opportunity in the education sector. Currently, New Oriental Education exhibits a below-average downside deviation. It has an Information Ratio of 0.03 and a Jensen Alpha of 0.18. However, we recommend investors to further scrutinize New Oriental Education's expected returns to ensure all indicators align with the current outlook about its relatively low value at risk. Understanding different
market volatility trends can often assist investors in timing the market. Proper use of volatility indicators allows traders to measure New Oriental's stock risk against market volatility during both bullish and bearish trends.
The heightened level of volatility that accompanies bear markets can directly impact
New Oriental's stock price, adding stress to investors as they watch the value of their shares decrease. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. In conclusion, New Oriental Education stock shows strong potential for further growth, supported by a robust valuation real value of
71.49 and a market value of
76.16. With an analyst overall consensus of a 'Strong Buy', and eight out of seven analysts recommending a 'Strong Buy', the stock's future looks promising. The analyst target price estimated value stands at 84.071, indicating potential for considerable upside from the current price. However, investors should also consider the possible downside price of 67.26 and remain cautious. The company's fiscal year end in May could also bring new developments that might impact the stock's performance. .
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Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies.
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