New Oriental Education (NYSE:EDU): Exploring Valuation After Recent Double-Digit Share Price Gains

New Oriental Education & Technology Group (NYSE:EDU) shares have moved noticeably in recent weeks, catching investor attention as the company’s stock saw some double-digit gains over the past month. After recent volatility, some are asking what is next for this China-based education giant.

See our latest analysis for New Oriental Education & Technology Group.

After surging in recent weeks, New Oriental’s momentum is still playing catch-up to the bigger picture. The latest one-month share price return of 14.0% stands out after a lengthy lull. However, the year-to-date share price return remains in the red. Zooming out, the one-year total shareholder return is slightly negative, and the stock’s three-year total return of nearly 134% hints at the company’s strong underlying recovery story.

If this sort of growth trajectory has you interested in what else is out there, it might be the ideal moment to discover fast growing stocks with high insider ownership

With New Oriental shares rallying, the real question is whether there is hidden value left to unlock or if the market has already factored in the company’s growth potential. This could mean there are few bargains for investors to seize.

Most Popular Narrative: Fairly Valued

With New Oriental’s narrative fair value coming in at $58.31, almost matching the last close at $58.56, analysts see the stock as tightly tracking its future prospects. The stage is set to examine what’s supporting this precise alignment between target and market price.

Continued investment and rollout of omnichannel online-merge-offline (OMO) and AI-driven systems are enabling operating leverage, cost reductions, and higher efficiency in delivery. This is already resulting in improved operating margins, supporting future earnings growth through both topline expansion and margin expansion.

Read the complete narrative.

Want to know what underpins this pinpoint fair value? The secret lies in predicted operational leaps and a margin story that is anything but ordinary. Uncover the bold projections and key assumptions that shape this razor-thin valuation margin. Are you ready to see what could swing the price?

Result: Fair Value of $58.31 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, uncertainty lingers because intensifying competition and ongoing overseas revenue pressures could undermine New Oriental’s impressive margin story in the coming quarters.

Find out about the key risks to this New Oriental Education & Technology Group narrative.

Another View: What Does the DCF Say?

Taking a different perspective, our DCF model estimates that New Oriental is trading well below its intrinsic value. The fair value projection is $129.81 per share, compared to recent prices near $60. This suggests significant upside if the model's long-term cash flow assumptions are realized. Does this much larger estimate reflect hidden potential, or is the DCF being too optimistic about future growth?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out New Oriental Education & Technology Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own New Oriental Education & Technology Group Narrative

If you think the data tells a different story or want to dig deeper on your own terms, building your own narrative takes less than three minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding New Oriental Education & Technology Group.

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This article by Simply Wall St is general in nature. We provide commentary 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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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