Gaotu Techedu Valuation

Q: What is the Fair Price of GOTU when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

GOTU ($2.87) is trading below our estimate of [[fair value]] ($27.7)

Is GOTU undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Below Fair Value
Significantly Below Fair Value
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of GOTU when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: GOTU ($2.87) is trading below our estimate of fair value ($27.7)

Significantly Below Fair Value: GOTU is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for GOTU?

Key metric: As GOTU is unprofitable we use its Price-To-Sales Ratio for relative valuation analysis.

The above table shows the Price to Sales ratio for GOTU. This is calculated by dividing GOTU's market cap by their current revenue.
What is GOTU's PS Ratio?
PS Ratio	1.5x
Sales	CN¥3.51b
Market Cap	CN¥4.69b

GOTU key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.5x
Enterprise Value/EBITDA	-2.4x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does GOTU's PS Ratio compare to its peers?

The above table shows the PS ratio for GOTU vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PS	Estimated Growth	Market Cap
Peer Average	1.1x
DAO Youdao	1x	11.5%	US$730.3m
LINC Lincoln Educational Services	1.2x	9.8%	US$518.1m
CNGO Cengage Learning Holdings II	0.8x	n/a	US$1.2b
UDMY Udemy	1.5x	6.6%	US$1.2b
GOTU Gaotu Techedu	1.5x	33.2%	US$646.8m

Price-To-Sales vs Peers: GOTU is expensive based on its Price-To-Sales Ratio (1.5x) compared to the peer average (1.1x).

Price to Sales Ratio vs Industry

How does GOTU's PS Ratio compare vs other companies in the US Consumer Services Industry?

12 Companies	Price / Sales	Estimated Growth	Market Cap
WW WW International	0.1x	-3.7%	US$99.83m
BEDU Bright Scholar Education Holdings	0.2x	n/a	US$54.40m
BODI Beachbody Company	0.1x	-12.9%	US$43.90m
PET Wag! Group	0.1x	0.6%	US$9.91m

12 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Sales vs Industry: GOTU is expensive based on its Price-To-Sales Ratio (1.5x) compared to the US Consumer Services industry average (1.3x).

Price to Sales Ratio vs Fair Ratio

What is GOTU's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

GOTU PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	1.5x
Fair PS Ratio	2.5x

Price-To-Sales vs Fair Ratio: GOTU is good value based on its Price-To-Sales Ratio (1.5x) compared to the estimated Fair Price-To-Sales Ratio (2.5x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst GOTU forecast and predictions for the stock price in 12 month’s time.
Date	Share Price	Average 1Y Price Target	Dispersion	High	Low	1Y Actual price	Analysts
Current	US$2.87	US$4.80 +67.2%	20.2%	US$6.11	US$2.90	n/a	6
Nov ’25	US$3.08	US$5.00 +62.2%	20.3%	US$6.26	US$2.97	n/a	7
Oct ’25	US$3.94	US$5.17 +31.2%	21.3%	US$6.67	US$2.94	n/a	8
Sep ’25	US$3.18	US$5.71 +79.4%	30.1%	US$9.19	US$2.95	n/a	8
Aug ’25	US$4.23	US$8.84 +109.1%	19.7%	US$12.32	US$6.56	n/a	8
Jul ’25	US$4.92	US$8.84 +79.8%	19.7%	US$12.32	US$6.56	n/a	8
Jun ’25	US$5.70	US$8.84 +55.2%	19.7%	US$12.32	US$6.56	n/a	8
May ’25	US$6.49	US$8.85 +36.3%	19.7%	US$12.27	US$6.56	n/a	7
Apr ’25	US$7.09	US$8.94 +26.0%	21.1%	US$12.35	US$6.60	n/a	6
Mar ’25	US$8.09	US$8.14 +0.6%	36.1%	US$12.34	US$2.95	n/a	6
Feb ’25	US$3.65	US$4.19 +14.9%	22.3%	US$5.90	US$2.95	n/a	6
Jan ’25	US$3.62	US$3.34 -7.7%	35.0%	US$5.50	US$2.31	n/a	6
Dec ’24	US$2.86	US$3.06 +7.1%	24.7%	US$4.30	US$2.30	n/a	6
Nov ’24	US$2.31	US$4.18 +81.1%	41.3%	US$6.20	US$1.30	US$3.08	5
Oct ’24	US$2.76	US$4.18 +51.6%	41.3%	US$6.20	US$1.30	US$3.94	5
Sep ’24	US$2.94	US$4.18 +42.3%	41.3%	US$6.20	US$1.30	US$3.18	5
Aug ’24	US$3.94	US$4.42 +12.3%	43.8%	US$6.54	US$1.25	US$4.23	5
Jul ’24	US$2.89	US$4.46 +54.2%	43.9%	US$6.60	US$1.26	US$4.92	5
Jun ’24	US$2.55	US$4.05 +59.0%	44.4%	US$6.10	US$1.26	US$5.70	4
May ’24	US$3.37	US$4.09 +21.4%	43.7%	US$6.13	US$1.30	US$6.49	4
Apr ’24	US$4.22	US$3.77 -10.7%	52.1%	US$6.09	US$1.29	US$7.09	3
Mar ’24	US$3.48	US$3.16 -9.2%	44.4%	US$4.70	US$1.31	US$8.09	3
Feb ’24	US$4.21	US$2.48 -41.0%	55.8%	US$4.43	US$1.34	US$3.65	3
Jan ’24	US$2.36	US$2.45 +3.7%	55.3%	US$4.35	US$1.30	US$3.62	3
Dec ’23	US$1.26	US$1.69 +34.1%	19.9%	US$2.12	US$1.30	US$2.86	3
Nov ’23	US$0.65	US$1.74 +168.1%	24.2%	US$2.29	US$1.26	US$2.31	3

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.