• New Oriental Education’s 3Q adjusted earnings per American depositary receipts (ADS) were 63c, missing the estimated 69c.
• The operating income for the 3rd quarter was $113.4 million, surpassing the estimated $104.8 million.
• Capital expenditure incurred in this period amounted to $80.1 million.
• Adjusted operating margin was 11.7%, slightly lower than the estimate of 12.9%.
• General and administrative expenses were at $287.8 million, less than the estimated $308.5 million.
• Net revenue exceeded expectations at $1.21 billion, the estimate was only $1.1 billion.
• 4th quarter net revenue forecast ranges from $1.10 billion to $1.13 billion, aligning with the estimations.
• In terms of operational currency (Renminbi), a revenue increase of 34% to 37% is projected for the fourth quarter of fiscal 2024.
• New educational business initiatives have shown promising results with a 72.7% revenue growth year over year.
• Continuation of significant year-over-year improvement in their educational business’s operating margin, driven by strong revenue growth and better utilization of facilities and teaching resources, was observed.
• The company holds a strong investment position with 26 buys, 1 hold, and just 1 sell.
New Oriental Education & Techn on Smartkarma
On Smartkarma, independent analysts like Steve Zhou, CFA, are covering New Oriental Education & Technology. In his report “China Tutoring – Here Comes The Policy Tailwind,” Steve highlights the new draft regulation issued by the Ministry of Education in China regarding K12 tutoring. The clarity provided in the regulation has alleviated investor concerns, indicating an equilibrium in the tutoring sector involving companies like New Oriental Education. This concrete policy direction is seen as a positive development by investors.
Another analyst, Steven Holden, discusses in his report “New Oriental Education & Technology: Back From the Dead” how MSCI China Funds are re-engaging with the company after a significant exodus in 2021 due to China’s Tech Crackdown. Since hitting lows in 2022, New Oriental Education has been a beneficiary of active fund rotation, with previous holders like HSBC, Mirae, and BlackRock reentering their positions. Despite this renewed interest, there is still room for growth for New Oriental Education to reach previous highs, as highlighted by Steven Holden.
A look at New Oriental Education & Techn Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 1 | |
| Growth | 3 | |
| Resilience | 5 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.2 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Based on the Smartkarma Smart Scores, New Oriental Education & Technology Group, Inc. shows a promising long-term outlook. With a strong Resilience score of 5, the company demonstrates robustness and stability in the face of market uncertainties. Additionally, scoring a 3 in Growth indicates potential for expansion and development in the future, reflecting positively on its prospects.
Furthermore, New Oriental Education & Technology Group received a solid Momentum score of 5, suggesting that the company is gaining traction and moving in a positive direction. Although its Value and Dividend scores are relatively lower at 2 and 1 respectively, the overall outlook appears bright for the company, especially with its focus on educational services and software development.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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