Shares of New Oriental Education and Technology Group (EDU 9.58%) tacked on 10% last month according to data from S&P Global Market Intelligence. The stock was mostly quiet throughout the month, then whipsawed after its earnings report, and ultimately finished higher as rival TAL Education Group posted strong revenue growth in its earnings report.
The chart below shows how the stock moved sharply following its report.
In its first-quarter earnings report, New Oriental showed 24.6% revenue growth to $1.07 billion, which matched estimates, while operating income jumped 52.6% to $246.2 million and adjusted earnings per share rose from $1.16 to $1.44, beating expectations at $1.38.
Enrollments in the quarter jumped 50.4% to 2.61 million, and executive chairman Michael Yu noted, "The K-12 after-school tutoring business continued to be our key growth driver, and achieved a year-over-year revenue growth of approximately 35%, or 40% if measured in renminbi [yuan]."
Shares initially fell 7% on the report, even though the company beat earnings estimates, but rose 11% over the next two sessions as the stock recovered after Tal delivered strong revenue growth in its report. New Oriental's rival in after-school tutoring in China posted better-than-expected revenue growth in its second-quarter report and offered bullish guidance for the current quarter, signaling strong demand for tutoring services.
New Oriental shares have now more than doubled this year on strong revenue growth. The sector seems to be immune to the vicissitudes of the Chinese economy and the trade war because demand for education is recession-proof.
Looking ahead to the current quarter, the company continues to expect revenue to accelerate again, improving to a range of 26% to 29%. If it can continue to boost top-line growth, the stock could move even higher.