(EDU) New Oriental Education - Ratings and Ratios

Naval Ravikant here. Let me break down New Oriental Education & Technology Group Inc. (EDU) for you. This is a company thats been around since 1993, headquartered in Beijing, and its a major player in Chinas private education sector. They operate under the New Oriental brand and are listed on the NYSE with a market cap of $8.176 billion as of recent data.

EDUs business is divided into four key segments. First, theres the Educational Services and Test Preparation Courses. This is their bread and butter. Theyre known for helping students prepare for exams like the TOEFL, IELTS, and the Chinese gaokao. These arent just local exams; theyre gateways for students aiming for international universities, which gives EDU a significant role in the global education pipeline.

The second segment is Online Education and Other Services. This is where Koolearn comes in, their online learning platform. The shift to digital education has been a big trend, especially post-2020, and EDU has positioned itself well here. They offer a range of courses and intelligent learning systems, which use technology to personalize education for students. This segment is crucial because it allows them to scale beyond physical classrooms and reach a wider audience.

The third segment is Overseas Study Consulting Services. This is about helping students navigate the complexities of studying abroad. From application assistance to visa support, EDU acts as a bridge for Chinese students looking to study in countries like the U.S., U.K., and Australia. This service not only adds revenue but also builds long-term relationships with students and families.

The fourth segment is Educational Material and Distribution. EDU develops and distributes its own materials for language training and test prep. This vertical integration means they control the quality of their content, which is a big plus. They also sell these materials through their network of schools, learning centers, and bookstores, creating an additional revenue stream.

Looking at the financials, EDU has a trailing P/E ratio of 21.74 and a forward P/E of 13.89, indicating that investors are pricing in future growth. The P/B ratio is 2.21, which suggests that the market values the companys assets at a premium. The P/S ratio of 1.76 tells us that investors are paying $1.76 for every dollar of sales, which is reasonable for a company in the education sector