Breaking Down New Oriental Education & Technology Group Inc. (EDU) Financial Health: Key Insights for Investors

Are you keeping a close watch on New Oriental Education & Technology Group Inc. (EDU) and wondering about its financial stability? Let's delve into some key figures from fiscal year 2024. The company's total net revenues reached $4,313.6 million, marking a substantial 43.9% year-over-year increase. Moreover, operating income stood at $350.4 million, reflecting an impressive 84.4% increase compared to the previous year. But that's not all – net income also saw a rise, reaching $389.64 million. Want to understand what these numbers mean for investors? Keep reading to uncover valuable insights into New Oriental's financial performance and future prospects.

New Oriental Education & Technology Group Inc. (EDU) Revenue Analysis

To understand the financial health of New Oriental Education & Technology Group Inc. (EDU), a detailed analysis of its revenue streams is essential. This involves examining the primary sources of revenue, historical growth rates, and the contribution of different business segments.

New Oriental Education & Technology Group Inc.'s revenue is derived from various educational programs and services. These include:

• Test preparation courses: These courses prepare students for various international and domestic standardized tests.
• After-school tutoring: This involves providing tutoring services to students in various subjects.
• Language training: This includes English and other foreign language training programs.
• Online education: Delivery of educational content and services through online platforms.
• Educational content and distribution: This incorporates the creation and distribution of books and other educational materials.

Analyzing the year-over-year revenue growth rate provides insights into the company's performance and market position. Examining historical trends in revenue growth, including percentage increases or decreases, helps in understanding the company's ability to adapt to changing market conditions and maintain a competitive edge.

The contribution of different business segments to New Oriental Education & Technology Group Inc.'s overall revenue is a critical factor in understanding the company's financial structure. By identifying which segments contribute the most, it’s possible to evaluate the strengths and weaknesses of the company’s diverse offerings.

Significant changes in revenue streams should be carefully analyzed to understand their impact on the company's financial health. These changes may be due to:

• Changes in market demand: Shifts in student preferences and demand for specific courses or services.
• Regulatory changes: New regulations affecting the education sector.
• Competitive pressures: Actions taken by competitors that impact New Oriental Education & Technology Group Inc.'s market share.
• Strategic initiatives: New programs or services introduced by the company.

For example, in fiscal year 2024, New Oriental Education & Technology Group Inc. reported a 14.9% year-over-year increase in total net revenues, reaching $3.68 billion. This growth was primarily driven by an increase in student enrollments in its test preparation courses and study abroad consulting services. Specifically, the number of student enrollments increased by 24.7% year over year. The key highlights from the financial data include:

The following table presents a summary of New Oriental Education & Technology Group Inc.'s revenue streams for fiscal year 2024:

Understanding these dynamics is crucial for investors looking to assess the long-term viability and growth potential of New Oriental Education & Technology Group Inc. Breaking Down New Oriental Education & Technology Group Inc. (EDU) Financial Health: Key Insights for Investors

New Oriental Education & Technology Group Inc. (EDU) Profitability Metrics

Understanding New Oriental Education & Technology Group Inc. (EDU)'s profitability involves examining several key metrics that provide insights into its financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins, each offering a different perspective on the company's ability to generate earnings.

Gross profit is the revenue a company retains after deducting the costs associated with producing its goods and services. As of the fiscal year 2024, New Oriental Education & Technology Group Inc. (EDU) reported a gross profit of $1.794 billion. This reflects the company's efficiency in managing its cost of revenue relative to its sales.

Operating profit, also known as earnings before interest and taxes (EBIT), is a crucial measure of a company's profitability from its core operations. For the fiscal year 2024, New Oriental Education & Technology Group Inc. (EDU)'s operating profit stood at $27.432 million. This figure indicates the company's earnings after deducting operating expenses such as salaries, rent, and marketing costs.

Net profit represents a company's profit after all operating expenses, interest, taxes, and other expenses have been deducted from total revenue. In the fiscal year 2024, New Oriental Education & Technology Group Inc. (EDU) reported a net profit of $27.432 million. This is often considered the 'bottom line' and is a key indicator of overall financial performance.

Here's a summary of New Oriental Education & Technology Group Inc. (EDU)'s profitability metrics for the fiscal year 2024:

When evaluating New Oriental Education & Technology Group Inc. (EDU)'s financial performance, comparing its profitability ratios with industry averages provides valuable context. While specific industry averages can fluctuate, this comparative analysis helps determine whether the company is performing above or below its peers.

Analysis of operational efficiency involves assessing how well New Oriental Education & Technology Group Inc. (EDU) manages its costs and maintains healthy gross margin trends. Effective cost management and consistent gross margins are indicators of strong operational performance, contributing to overall profitability.

• Cost Management: Efficiently controlling operational costs to maximize profit margins.
• Gross Margin Trends: Monitoring gross margins to identify trends and areas for improvement in pricing and cost control.

For further insights into the company's mission and values, explore Mission Statement, Vision, & Core Values of New Oriental Education & Technology Group Inc. (EDU).

New Oriental Education & Technology Group Inc. (EDU) Debt vs. Equity Structure

Understanding how New Oriental Education & Technology Group Inc. (EDU) finances its operations and growth is crucial for investors. This involves examining its debt levels, debt-to-equity ratio, and overall approach to balancing debt and equity.

As of November 2024, New Oriental Education & Technology Group Inc.'s total debt was reported at $0.72 billion USD. Total debt includes both current and non-current debts listed on the balance sheet.

A key metric for assessing financial leverage is the debt-to-equity ratio. However, based on the most recent balance sheet, New Oriental Education & Technology Group Inc. has a notably low debt-to-equity ratio due to its significant cash reserves. As of November 2024, the company had $14.4 million in debt against $4.71 billion in cash. The company had equity of US$3.98 billion. This results in a very low debt-to-equity ratio.

To provide context, it's useful to compare this to industry standards. The average debt-to-equity ratio for the Educational Services industry is approximately 0.71. New Oriental Education & Technology Group Inc.'s ratio is significantly lower than the industry average, indicating a more conservative approach to leverage.

Credit Ratings and Recent Debt Activity:

Moody's Investors Service affirmed New Oriental Education & Technology Group Inc. at 'Ba1' (LT- foreign currency credit rating) with a stable outlook on July 15, 2024. This indicates a moderate credit risk. Recent activity includes:

• Moody's affirmed New Oriental's Ba1 CFR; revised outlook to stable from negative on March 10, 2023.
• Moody's assigned 'Ba1' (LT- foreign currency credit rating) to New Oriental Education & Technology Group on November 19, 2021.

Balancing Debt and Equity:

New Oriental Education & Technology Group Inc. has historically maintained a strong cash position, often described as a net cash position. As of November 2024, the company's cash and investments significantly outweighed its debt, with approximately $4.9 billion in cash and investments versus only about $14 million in outstanding debt. This allows the company financial flexibility.

The company's strategy reflects a preference for funding growth through equity and operational cash flow rather than relying heavily on debt. This is further supported by the fact that New Oriental Education & Technology Group Inc. new initiatives contributed over 40% of revenue in fiscal year 2024.

New Oriental Education & Technology Group Inc. (EDU) Liquidity and Solvency

Assessing the financial health of Breaking Down New Oriental Education & Technology Group Inc. (EDU) Financial Health: Key Insights for Investors requires a close look at its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term and long-term obligations.

Liquidity Ratios:

• Current Ratio: As of a recent report, the current ratio for New Oriental Education & Technology Group Inc. is 1.71. A current ratio of greater than 1 indicates that the company has more current assets than current liabilities, suggesting a good liquidity position.
• Quick Ratio: The quick ratio, which excludes inventory from current assets, was 1.52, 1.45 and 0.34 in the past. This indicates the company's ability to meet its short-term liabilities with its most liquid assets.

Working Capital Trends:

Net working capital (NWC) is a measure of a company's short-term financial health. New Oriental Education & Technology Group Inc.'s net working capital last quarter was -2.256 billion. Working capital trends can offer insights into the efficiency of a company's operations and its ability to manage short-term assets and liabilities.

Cash Flow Statements Overview:

An overview of cash flow statements helps in understanding the trends in operating, investing, and financing activities. For the second fiscal quarter of 2025, New Oriental reported a positive operating cash flow of approximately $313.3 million. A detailed analysis is challenging because New Oriental publishes a condensed version of its cash flow statement.

Here's a summary of New Oriental Education & Technology Group Inc.'s cash flow activities based on available information:

• Operating Activities: New Oriental recorded a positive operating cash flow of US$313.3 million for the quarter ended November 30, 2024.
• Investing Activities: Capital expenditures for the same quarter were US$60.6 million.
• Financing Activities: New Oriental is implementing a share buyback program, which was recently extended to May 31, 2025, and increased from $400 million to $700 million. As of October 22, 2024, the company could have bought back approximately $250 million worth of its own shares, representing around 2.62% of the company's current market capitalization.

Cash and Investments:

As of November 30, 2024, New Oriental had:

• Cash and cash equivalents: US$1,418.2 million
• Term deposits: US$1,443.2 million
• Short-term investments: US$1,951.4 million

Potential Liquidity Concerns or Strengths:

New Oriental has a healthy balance sheet with substantial cash reserves. The company's debt consists solely of lease obligations, which totaled $696.07 million, while cash equivalents and short-term investments account for $4.81 billion. The high cash reserves allow the company to launch new projects and participate in M&A transactions without significant external financing.

The company expects revenue growth of 25%-28% year-over-year for Q2 FY2025.

Additional Factors:

New Oriental is a Chinese education company that has also been developing its e-commerce business since 2021. The company's education business is based on providing services in offline schools and training centers, the total number of which exceeds 1,000 institutions. For students living outside of major cities, New Oriental offers similar training programs in an online format.

These factors indicate a stable financial position for New Oriental Education & Technology Group Inc.

New Oriental Education & Technology Group Inc. (EDU) Valuation Analysis

Determining whether New Oriental Education & Technology Group Inc. (EDU) is overvalued or undervalued requires analyzing several key financial metrics and market indicators.

Here's a breakdown:

• Price-to-Earnings (P/E) Ratio:
• On April 10, 2025, the P/E ratio was 17.74.
• As of April 15, 2025, the P/E ratio is 18.96, based on the latest EPS of $2.4 and a stock price of $45.5 per share.
• The P/E ratio as of April 2025 (TTM) for the Hong Kong Stock Exchange (9901.HK) is 19.78.
• The trailing P/E ratio is 19.55 and the forward P/E ratio is 15.66.
• New Oriental Education & Technology's latest twelve months P/E ratio is 23.2x.
• Historically, New Oriental Education & Technology's P/E ratio for fiscal years ending May 2020 to 2024 averaged -5.7x.
• Price-to-Book (P/B) Ratio: The P/B ratio is approximately 2.00.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio:
• The EV/EBITDA ratio is 6.24.
• As of April 13, 2025, the EV/EBITDA ratio is 13.03.
• New Oriental Education & Technology's latest twelve months EV/EBITDA is 6.5x.
• Historically, New Oriental Education & Technology's EV/EBITDA for fiscal years ending May 2020 to 2024 averaged 17.0x.

These ratios help investors understand how the market values the company’s earnings and assets.

Stock Price Trends: Over the last 12 months, the stock price has fallen by 48.42%. However, in the last four weeks, the stock gained 14.73%. As of April 17, 2025, the stock traded at $44.82.

Dividend Yield and Payout Ratios: The company's dividend yield (FWD) is approximately 1.39%. The last ex-dividend date was September 9, 2024, with a distribution of $0.579 per share.

Analyst Consensus:

• The consensus rating for the stock is 'Hold'.
• Out of 6 analysts, 1 has given a 'Sell' rating, 4 have given a 'Hold' rating, and 1 has given a 'Buy' rating.
• Based on 9 Wall Street analysts, the average 12-month price target is $58.65.
• The high forecast is $80.00, and the low forecast is $44.00.

JPMorgan recently reduced its price target to $48.00, maintaining a 'Neutral' rating, while Jefferies maintains a 'Buy' rating with a $73 target.

For further insights into the company's investors, consider exploring Exploring New Oriental Education & Technology Group Inc. (EDU) Investor Profile: Who’s Buying and Why?

Here is a table summarizing key valuation metrics for New Oriental Education & Technology Group Inc. (EDU):

Based on available data, New Oriental Education & Technology Group Inc. appears to be potentially undervalued, considering its growth rates and analyst expectations. However, investors should consider potential risks, such as macroeconomic conditions and conservative forward guidance, before making investment decisions.

New Oriental Education & Technology Group Inc. (EDU) Risk Factors

New Oriental Education & Technology Group Inc. (EDU) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, and broader market conditions. Understanding these factors is crucial for investors.

One of the primary risks stems from the intensely competitive nature of the private education sector in China. This competition includes other large education companies, smaller local providers, and the increasing popularity of online learning platforms. Intense competition could lead to price wars, increased marketing expenses, and a potential loss of market share for New Oriental Education & Technology Group Inc. (EDU). Moreover, the company's ability to attract and retain qualified teachers and instructors is critical. Failure to do so could degrade the quality of its educational offerings and negatively affect student enrollment and satisfaction.

Regulatory changes pose a substantial risk. The Chinese government has been known to implement new regulations affecting the education sector, particularly concerning curriculum content, pricing, and operational licensing. For example, changes in regulations related to after-school tutoring or restrictions on foreign investment in education could severely impact New Oriental Education & Technology Group Inc.'s (EDU) business model and financial performance. Compliance with evolving regulations requires continuous monitoring and adaptation, which can be costly and time-consuming.

Market conditions also present significant risks. Economic downturns in China or globally could reduce household income and, consequently, parents' willingness or ability to invest in private education. Shifts in demographic trends, such as declining birth rates, could decrease the overall demand for educational services. Additionally, changes in student preferences or technological advancements that favor alternative learning methods could erode New Oriental Education & Technology Group Inc.'s (EDU) traditional market.

Recent earnings reports and filings highlight several operational, financial, and strategic risks. Operationally, the company faces challenges in managing its extensive network of learning centers across diverse geographic regions. Ensuring consistent service quality and operational efficiency across all locations is a complex task. Financially, fluctuations in the Chinese Yuan exchange rate can impact the company’s reported revenue and profitability, especially concerning its U.S. dollar-denominated debt. Strategically, the company must effectively adapt to changing market dynamics and invest in new growth areas, such as online education and innovative learning solutions, to maintain its competitive edge.

Mitigation strategies often involve diversifying service offerings, expanding into new geographic markets, and investing in technology to enhance online learning platforms. New Oriental Education & Technology Group Inc. (EDU) might also focus on strengthening its brand reputation through superior educational outcomes and customer service. Building strong relationships with regulatory bodies can help the company anticipate and adapt to policy changes more effectively. Prudent financial management, including hedging against currency fluctuations and maintaining a healthy balance sheet, is also crucial for mitigating financial risks.

Investors interested in a deeper dive into the company's profile can explore: Exploring New Oriental Education & Technology Group Inc. (EDU) Investor Profile: Who’s Buying and Why?

New Oriental Education & Technology Group Inc. (EDU) Growth Opportunities

For New Oriental Education & Technology Group Inc. (EDU), several factors could drive future growth. These include innovative product offerings, expansion into new markets, strategic partnerships, and potential acquisitions. The ability to adapt to changing regulatory environments and technological advancements in education will also play a crucial role.

Analyzing New Oriental Education & Technology Group Inc.'s (EDU) growth prospects involves understanding its strategic initiatives, market position, and financial forecasts. While specific future revenue growth projections and earnings estimates are subject to market dynamics and company performance, examining past trends and current strategies can provide valuable insights. As of the fiscal year 2024, the company reported strong financial results, indicating a solid foundation for future expansion.

Key growth drivers for New Oriental Education & Technology Group Inc. (EDU) include:

• Product Innovations: Developing new courses and educational materials that cater to evolving student needs and market demands.
• Market Expansions: Extending its presence in existing markets and penetrating new geographic regions.
• Strategic Partnerships: Collaborating with other educational institutions or technology companies to enhance its offerings.
• Acquisitions: Acquiring complementary businesses to expand its market share and service portfolio.

To understand New Oriental Education & Technology Group Inc.'s (EDU) competitive advantages, it's essential to consider factors such as brand reputation, the quality of its teaching staff, and its established network of learning centers. These elements contribute to customer loyalty and provide a strong base for sustained growth. As of now, here is a table that represents the key financials of the company.

These figures reflect New Oriental Education & Technology Group Inc.'s (EDU) financial performance and can be indicative of its capacity for future investments and growth initiatives. For a deeper dive into the company’s financial health, you can check this out: Breaking Down New Oriental Education & Technology Group Inc. (EDU) Financial Health: Key Insights for Investors

Strategic initiatives such as focusing on quality educational content and services, improving online learning platforms, and adapting to regulatory changes in the education sector are crucial for sustaining growth. Furthermore, New Oriental Education & Technology Group Inc.'s (EDU) ability to leverage technology to enhance its educational offerings and reach a broader audience will be vital for maintaining a competitive edge.