Gaotu Stock Story

GOTU
 Stock
  

USD 1.60  0.01  0.63%   

As many rational traders are trying to avoid consumer defensive space, it makes sense to review Gaotu Techedu a little further and understand how it stands against ITT Educational and other similar entities. We are going to break down some of the competitive aspects of both Gaotu and ESINQ.
Published over three months ago
View all stories for Gaotu Techedu | View All Stories

Is Gaotu riskier than ITT Educational Services (NYSE:ESINQ)?

By analyzing existing basic indicators between Gaotu Techedu and ESINQ, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in ESINQ with a short position in Gaotu Techedu. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
One of the ways to look at asset utilization of Gaotu is to check how much profit was generated for every dollar of assets it reports. Gaotu Techedu retains a negative application of resources of -38.58 (percent), losing $0.39 for each dollar of resources held by the firm. Inadequate asset utilization attests that the company is being less effective with each dollar of resources it retains. Simply put, asset utilization of Gaotu Techedu shows how discouraging it operates for each dollar spent on its resources.

How important is Gaotu Techedu's Liquidity

Gaotu Techedu financial leverage refers to using borrowed capital as a funding source to finance Gaotu Techedu ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Gaotu Techedu financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Gaotu Techedu's total debt and its cash.

How does Gaotu utilize its cash?

To perform a cash flow analysis of Gaotu Techedu, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Gaotu Techedu is receiving and how much cash it distributes out in a given period. The Gaotu Techedu cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Gaotu Techedu Net Cash Flow from Operations is comparatively stable at the moment as compared to the past year. Gaotu Techedu reported Net Cash Flow from Operations of (4.19 Billion) in 2021

Detailed Perspective On Gaotu Techedu

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Lets now check Gaotu Techedu revenue. Based on the latest financial disclosure, Gaotu Techedu reported 8.35 B of revenue. This is 43.79% lower than that of the Consumer Defensive sector and significantly higher than that of the Education & Training Services industry. The revenue for all United States stocks is 11.5% higher than that of Gaotu Techedu. As for ITT Educational we see revenue of 773.44 M, which is 3.41% lower than that of the Education & Training Services

Gaotu8.35 Billion
Sector800.78 Million
ESINQ773.44 Million
8.3 B
Gaotu
Sector
ESINQ

Gaotu Techedu implied volatility may change after the gain

The treynor ratio is down to -0.21 as of today. Gaotu Techedu is displaying above-average volatility over the selected time horizon. Investors should scrutinize Gaotu Techedu independently to ensure intended market timing strategies are aligned with expectations about Gaotu Techedu volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Gaotu Techedu's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Gaotu Techedu's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Gaotu Techedu Implied Volatility

Gaotu Techedu's implied volatility exposes the market's sentiment of Gaotu Techedu stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Gaotu Techedu's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Gaotu Techedu stock will not fluctuate a lot when Gaotu Techedu's options are near their expiration.

The Current Takeaway on Gaotu Techedu Investment

Whereas few other entities in the education & training services industry are either recovering or due for a correction, Gaotu Techedu may not be performing as strong as the other in terms of long-term growth potentials. While some private investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Gaotu Techedu.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Gaotu Techedu. Please refer to our Terms of Use for any information regarding our disclosure principles.

Would you like to provide feedback on the content of this article?

You can get in touch with us directly or send us a quick note via email to editors@macroaxis.com