Why New Oriental Education & Tech Group Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese private education company New Oriental Education & Tech  (NYSE: EDU  ) sank 10% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has pulled back in 2014 on concerns over slowing growth, and today's fiscal third-quarter results -- earnings per share of $0.30 on revenue growth of 16.4% -- coupled with downbeat guidance only reinforces those worries. In fact, management blamed the lower than expected revenue on paltry enrollment growth of 4.5%, suggesting that its competitive position is weakening as well.

Now what: Management now sees fourth-quarter revenue of $278 million to $287.6 million, representing year-over-year growth of 16% to 20%. "In the quarters ahead, we plan to accelerate the pace of opening new learning centers, with a focus on opening new learning centers in fast growing, high profit margin cities," said Chairman and CEO Michael Yu. "We expect POP Kids enrollments to pick up in the summer quarter once the new programs are launched and we increase promotional efforts." When you couple today's pullback with New Oriental's still-rock-solid balance sheet, the downside might still be limited enough to bet on those prospects. 

Educate yourself about this hot investment opportunity
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2933257, ~/Articles/ArticleHandler.aspx, 9/4/2015 4:59:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated Moments ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:02 PM
EDU $19.66 Down -0.57 -2.82%
New Oriental Educa… CAPS Rating: *