Since going public mid-September, the stock price of New Oriental (NYSE:EDU), an educational provider in China, has been on a roller coaster. It surged from $15 to $28.40 and then fell to $22.20. Yesterday, on the news of its earnings report, the stock fell about 2% to $25.90. In a nutshell, the company continued its torrid growth rate, yet the valuation is still hefty.

In the third quarter, revenues increased 31.4% over the prior-year period to $54 million, and net income surged 100.8% to $20.8 million. Earnings per share for the quarter were $0.83, up from last year's $0.73.

New Oriental has two main business segments, which involve different touch points like physical classrooms, books, online training, and CD-ROMs.

Its oldest segment is test preparation (such as for law and med school). There's certainly competition, but the company has a trusted brand. This is critical for the test preparation market, in which students focus on those courses that are known to boost scores.

Next, New Oriental has courses for practical English. Of course, with China's global ambitions, having strong English skills is a valuable asset.

Both business segments continued to show combined enrollment growth of 25.9% to 337,400 on a year-over-year basis. To accommodate the growth, the company opened seven new schools in the third quarter.

What's more, New Oriental is disciplined with its costs. Despite the large revenue increase, operating expenses increased only 7.7% over the past year. But the company wants to make sure it continues to invest for the long term, so it has ramped up its selling and marketing expenses by 61.4% over the past year.

However, for the next quarter, don't expect blowout growth. Basically, this is the slowest time of the year for New Oriental. The revenue range is forecasted at $18.6 million to $19.9 million.

Besides, as is the case with other recent IPOs -- such as Riverbed Technology (NASDAQ:RVBD) and DivX (NASDAQ:DIVX) -- the stock price of New Oriental is frothy. The market cap is at a nosebleed $913 million, which makes the revenue multiple about 6 (assuming the company generates $150 million in revenues). In fact, as already seen so far, the stock has been quite volatile. So, for me, it makes sense to wait this one out.

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Fool contributor Tom Taulli does not own shares mentioned in this article.