New Oriental Education & Technology Group Inc. (EDU) Stock: A Strong Pick In The Service Sector Space? – iWatch Markets

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New Oriental Education & Technology Group Inc. (EDU) is headed down in the market in today’s trading session. The stock, focused in the service industry, is presently priced at $81.93 after tumbling -6.91% so far today. As it relates to service sector companies, there are several factors that have the potential to lead to movement in the market. News tends to be one of the biggest reasons for the movement. Here are the most recent stories centered around EDU:

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However, when making a decision with regard to investing, investors should focus on far more than news, especially in the ever incredibly complex service space. Here’s what’s happening with New Oriental Education & Technology Group Inc..

Recent Movement From EDU

Although a move toward the top in a single session, like what we’re seeing from New Oriental Education & Technology Group Inc. may make some investors fearful, a single session fall by itself should not be the basis of a decision to, or not to, buy a company’s stock. It’s always smart to dig into trends further out than a single trading session. When it comes to EDU, below are the trends that investors have seen:

  • Past Seven Days – Over the last five trading sessions, EDU has produced a change in price that amounts to -7.66%.
  • Past Month – The return from New Oriental Education & Technology Group Inc. in the last month comes to -2.93%.
  • Past 3 Months – Throughout the last three months, the company has generated a return on investment that works out to 13.41%
  • Past 6 Months – Over the last 6 months, we’ve seen a performance that works out to 45.16% from the company.
  • Year To Date – Since the the first trading session of this year EDU has generated a return of 60.57%.
  • Full Year – Lastly, over the past year, investors have seen movement of -4.33% from EDU. Throughout this period, the stock has traded at a high price of -24.30% and a low price of 62.88%.

Ratios Worth Paying Attention To

Digging into various ratios associated with a stock can give traders an understanding of just how risky and/or rewarding a an investment option might be. Here are a few of the key ratios to think about when digging into EDU.

Short Ratio – The short ratio is a measure of short interest. The higher this short ratio, the more investors have a belief that the value of the stock is going to go down. Throughout the sector, strong service sector stocks can carry a lower short ratio. On the other hand, we also tend to see quite a few short squeezes in the space. Nonetheless, when it comes to New Oriental Education & Technology Group Inc., the stock’s short ratio clocks in at 2.84.

Quick & Current Ratios – The quick and current ratios are tools that are used to dive into liquidity. Essentially, they measure the company’s abilities to pay for its debts when they come due using quick assets or current assets. do have positive current and quick ratios. In terms of EDU, the quick and current ratios come to 1.60 and 1.60 respectively.  

Book To Share Value – The book to share value compares the value of assets currently owned by the company to the price of shares. In this case, that ratio works out to 13.12.

Cash To Share Value – Finally, the cash to share value ratio compares the amount of cash the company has on hand to the value of shares. When it comes to EDU, the cash to share value is 17.20.

Show Me The Big Money

An interesting fact I’ve come to understand in my short period here has been that smart money tends to follow big money. That is to say, investors that want to keep the risk down will keep their eyes on moves made by institutions and insiders of the company. With that said, is big money interested in regard to EDU? Here’s the scoop:

  • Institutional Investors – Currently, institutional investors hold 85.50% of the company. However, it is important to note that institutional ownership has seen a move of 2.90% throughout the last quarter.
  • Investors On The Inside – with regard to insiders, those close to the company currently hold 0.20% of the company. Insider ownership of the company has seen a move of 0.00% throughout the last quarter.

How Analysts Feel About New Oriental Education & Technology Group Inc.

Although it’s never a smart idea to blindly follow the opinions of analysts, it is a smart idea to consider their thoughts to validate your own thoughts when it comes to making investment decisions in the service sector. Below are the recent moves that we’ve seen from analysts as it relates to EDU.

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Apr-24-19 Reiterated The Benchmark Company Buy $90 → $105
Apr-16-19 Upgrade Deutsche Bank Hold → Buy
Mar-25-19 Upgrade Morgan Stanley Equal-Weight → Overweight
Feb-11-19 Downgrade JP Morgan Overweight → Neutral
Jan-22-19 Upgrade CLSA Outperform → Buy

Financial Results And Expectations

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $3.35. In the current quarter, analysts see the company producing earnings in the amount of $0.66. Over the last 5 years, EDU has generated revenue in the amount of $20.60% with earnings coming in at 16.80%. On a quarter over quarter basis, earnings have seen movement of 42.50% and revenue has seen movement of 28.90%.

How Many Shares Of EDU Are Available?

Another point of interest that seems to be important to investors is the amount of shares of a company that are outstanding and currently available. At the moment, there are 158.94M shares of New Oriental Education & Technology Group Inc. outstanding. Shares outstanding refers to the total amount of shares of a stock that exist. As far as the float goes, or the amount of shares that are actually available on the retail market, EDU has a float of 119.24M.

Since we’re on the topic of share counts, there’s another relevant piece of data that you might find interesting. That would be the short percentage of the float. Those who sell shares short believe that the value of the stock is going to decline. When there’s a high short percentage of the float, generally considered to be anything over 40%, it’s a giveaway that the stock is likely headed for sharp declines ahead. Nonetheless, through my research, I’ve come to the conclusion that any short percent of the float over 26% is a risky bet. When it comes to EDU, the short percent of the float is 3.38%.

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