New Oriental Education & Technology Group: Beating Analyst Expectations but Falling Short on Earnings

New Oriental Education & Technology Group recently released its third quarter 2024 financial results, and the company reported a US$1.21 billion revenue, which was a 60% increase from the same quarter in 2023. Net income also rose to US$87.2 million, an impressive 6.8% increase from the previous year. However, profit margins decreased to 7.2% from 11% in 3Q 2023 due to higher expenses. Despite this, earnings per share (EPS) improved to US$0.53 from US$0.49 in 3Q 2023.

Despite revenue beating analyst expectations by a whopping 11%, EPS fell short by the same margin, leaving investors with some concerns about the company’s financial health. Looking ahead, New Oriental Education & Technology Group is forecasted to achieve an average annual revenue growth of a healthy 17% over the next three years compared to an industry average of only 11%. This suggests that investors have confidence in the company’s future prospects and are willing to pay a premium for it despite its recent decline in stock price by around -2%.

However, analyzing a company’s balance sheet is crucial when trying to understand its financial health properly. A comprehensive analysis can help determine whether a stock is over or undervalued based on factors such as fair value estimates, risks, dividends, insider transactions, and financial health indicators like debt-to-equity ratio and interest coverage ratio. It’s essential for investors who are looking at investing in this company to be aware of these metrics before making any investment decisions.

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