At US $ 2.13, is the New Oriental Education & Technology Group Inc. (NYSE: EDU) worth a close look?
New Oriental Education & Technology Group Inc. (NYSE: EDU), may not be a large cap stock, but it has seen a significant share price increase of over 20% in the past two years. months on the NYSE. As a mid-cap stock with high analyst coverage, you can assume that any recent change in the outlook for the company is already built into the stock price. However, what if the stock is still a good deal? Today, I will analyze the most recent outlook and assessment data from New Oriental Education & Technology Group to see if the opportunity still exists.
See our latest analysis for New Oriental Education & Technology Group
Is the New Oriental Education & Technology Group still cheap?
The stock price looks reasonable at the moment based on my multiple price model, where I compare the company’s price-to-earnings ratio to the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find that New Oriental Education & Technology Group’s 10.81x ratio is trading slightly below the 14.55x ratio of its industry peers, which means if you buy New Oriental Education & Technology Group today, you will pay a decent price for it. And if you think the New Oriental Education & Technology Group should trade at this level in the long run, then there isn’t much to gain over other peers in the industry. On top of that, it looks like New Oriental Education & Technology Group’s share price is pretty stable, which could mean there might be less of a chance to buy low in the future now that it trades around the price multiples of other industry peers. Indeed, the action is less volatile than the market in the broad sense given its low beta.
Can we expect growth from the New Oriental Education & Technology Group?
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s take a look at the future expectations of the business as well. With earnings expected to grow 80% over the next two years, the future looks bright for New Oriental Education & Technology Group. It looks like a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? EDU’s bullish future growth appears to have been factored into the current stock price, with stocks trading around industry price multiples. However, there are also other important factors that we did not consider today, such as the financial strength of the company. Have these factors changed since the last time you looked at the EDU? Will you have enough conviction to buy if the price fluctuates below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on EDU, this might not be the best time to buy, given that it trades around industry price multiples. However, the bullish forecast is encouraging for EDU, which means it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So, if you want to delve deeper into this title, it is crucial to consider the risks it faces. Concrete example: we have spotted 3 warning signs for New Oriental Education & Technology Group you must be aware.
If you are no longer interested in New Oriental Education & Technology Group, you can use our free platform to view our list of over 50 other stocks with high growth potential.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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