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Why is EDU Climbing? Here’s What You Need to Know!

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

New Oriental Education & Technology Group Inc. is experiencing a substantial market boost, reflected in Thursday’s 17.37 percent stock surge. This positive movement is driven by recent favorable developments, including stronger-than-expected quarterly earnings and strategic initiatives aimed at expanding their educational services. These elements have significantly bolstered investor confidence, leading to the stock’s notable upward trajectory.

Key Insights on EDU Right Now

  • Plans are afoot for EDU to conduct an on-market buyback of up to 16.5 million shares valued at AU$1 million over 12 months, and they also entered buyback agreements with two shareholders for 14.7 million shares.

Candlestick Chart

Live Update at 08:47:17 EST: On Thursday, September 26, 2024 New Oriental Education & Technology Group Inc. Sponsored ADR representing 10 (Cayman Islands) stock [NYSE: EDU] is trending up by 17.37%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of New Oriental Education & Technology’s Latest Earnings and Financial Metrics

New Oriental Education & Technology Group, listed under the ticker EDU, has recently seen some intriguing movements in its stock price. We can attribute these shifts to their strategic financial actions like buybacks and their robust earnings report. But first, let’s delve into the details.

EDU’s full-year revenue stands at $3B, with a revenue per share of $18.33. Despite some negative growth over the past few years (-27.16% for three years and -10.79% for five years), the company shows impressive resilience. The current Price-to-Earnings (P/E) ratio is 34.61, which suggests that investors are willing to pay a significant premium for expected growth. The enterprise value sits at $10.17B, with a Price-to-Sales (P/S) ratio of 7.44.

Picture this: EDU is in a bustling marketplace. Others are shouting their wares; meanwhile, EDU takes a more strategic approach. The company’s total assets are valued at a staggering $6.39T, with notable figures in cash and short-term investments at over $3.25T. Their total liabilities stand at $2.58T, offset by a strong equity base of $3.60T. This balanced dance between equity and liabilities demonstrates their robust financial footing.

One standout is EDU’s leverage ratio of 1.8. It’s like a tightrope walker balancing on a thin wire. Although there’s risk, it shows they’re efficiently utilizing the borrowed funds to generate returns. The quick ratio wasn’t provided, but with such strong liquidity, EDU seems well-positioned to cover its short-term liabilities comfortably.

Their long-term debt is at a manageable $146.53M, with interest coverage details missing. However, conservative leveraging and steady capital manage to paint a comforting picture. It’s like watching a seasoned chess player, biding their time, making precise moves while the crowd watches in suspense.

How the News Impacts EDU

Stock Buyback Plans:

EDU’s announcement of an on-market buyback for 16.5 million shares against an AU$1 million investment over the next 12 months is quite the bullish signal. Simply put, a share buyback reduces the number of shares available in the market, which can drive up their price. This move often indicates a company believes its stock is undervalued and demonstrates confidence in its future performance.

In addition, their agreements with two shareholders to buy back 14.7 million shares further solidify their intent. This aggressive buyback suggests that EDU is not just optimistic about its valuation but is also keen on improving earnings per share (EPS). Imagine a skilled gardener trimming branches to allow the healthier parts of the plant to thrive—that’s precisely what EDU is doing.

Recent Earnings Report:

Their earnings report shows resilience despite negative growth trends over the past three and five years. The market tends to look at past performance but values future potential more. EDU’s revenue, although shrinking, presents a challenge they’re strategically tackling, especially highlighted by the share buybacks.

Their strong cash positions ($1.77T) and extensive total assets ($6.39T) reflect a robust balance sheet capable of weathering economic uncertainties. Any investor worth their salt knows that cash is king, and in this realm, EDU reigns supreme.

The key ratios provided underline this stability and strategic planning. Their high P/E ratio (34.61) might seem alarming at first glance, portraying an expensive stock, but it also reflects the market’s future growth expectations.

More Breaking News

Potential Impact on Market:

This double-pronged approach of share buybacks and a solid earnings report often creates a domino effect in the market. Investors perceive the value in EDU’s stock, driving up demand and consequently the share price. It’s like a treasure hunt where the map is the company’s strong financials and strategic moves, guiding investors to the “X.”

In practical terms, this can lead to increased volatility in the stock’s price. However, it’s the kind of volatility that attracts both short-term traders and long-term investors. The traders smell the opportunity for quick gains, while investors see a stable company undervalued by the market, poised for future growth.

The Journey of EDU: A Financial Tale

EDU’s journey in the market is akin to an athlete training for the big leagues. Despite some setbacks, consistent training and strategic plays result in eventual triumphs. Their recent stock performance demonstrates this metaphor aptly.

Here’s a closer look: on Sep 26, 2024, the stock opened at $71.93, peaking at $74.68, and closed at $73.015. This volatility can be interpreted as the market responding to the buyback news and other financial signals.

Analyzing the intraday movements, EDU showed dynamic price adjustments. For instance, between 09:30 and 09:35, the stock moved from an opening of $71.93 to a high of $72.38 and then settled at $72.56. This short burst of activity suggests high intra-day volatility—perfect conditions for day traders looking to capitalize on quick movements.

But what does this mean for you as an investor or a trader? It signals opportunity. Short-term traders might play on these bursts, while long-term investors could see this as a dip to buy into.

Possible Scenarios Moving Forward

With such significant moves and financial schemes, where does EDU head next?

  1. Continued Buybacks: Expect the stock price to remain buoyant. As buybacks reduce supply, the value of remaining shares typically rises, boosting investor confidence and attracting more to the fold.
  2. Enhanced Financial Reporting: Transparency in future earnings reports will keep the investor sentiment positive. If EDU continues to demonstrate a solid financial base, the market will react favorably.
  3. Strategic Developments: Any new educational programs or strategic mergers could further impact stock positively. Innovation in their educational deliverables might take EDU to new heights.

In summary, EDU seems to be on a sturdy path with strategic financial moves and stable earnings reports acting as pillars. While the road may have bumps, the faith in the company’s resilience and strategic agility can offer both traders and investors an exciting journey ahead.

Conclusion:

The financial landscape is rife with opportunities, and EDU’s recent movements signal exciting times. Their strategic buybacks and solid financial metrics make for a compelling case. Whether you’re a trader sensing short-term gains or an investor seeing long-term value, EDU’s current trajectory paints an optimistic picture. As always, while opportunity looms large, keeping a close eye on further developments will be key to navigating this financial voyage successfully.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”