Cram Schools Test Prep Why New Oriental Educational Stock Gained 17% Last Month – Motley Fool

Why New Oriental Educational Stock Gained 17% Last Month – Motley Fool




What happened

Shares of New Oriental Educational & Technology Group (NYSE:EDU) were climbing higher last month after the Chinese provider of tutoring and test-prep services reported better-than-expected earnings in its third quarter, and benefited from a number of positive analyst notes in the period. According to data from S&P Global Market Intelligence, the stock finished the month up 17%. 

The chart below shows the gains throughout April.

EDU Chart

EDU data by YCharts.

So what

New Oriental stock popped 4% on April 7 as it was upgraded to conviction buy from buy at Goldman Sachs. Analyst Christine Cho called out the company’s long-term value proposition as China’s leading private educational service. The following day, the stock pulled back as rival TAL Education Group revealed fraudulent sales accounting, casting further doubt on Chinese stocks just two months after an accounting scandal at Luckin Coffee was uncovered. Though New Oriental shares fell on the news, it could benefit over the longer term from any perceived damage to its competitor.

A boy sits at a desk in front of a computer

Image source: Getty Images.

Shares swung after the company reported third-quarter earnings on April 21. For the January-March period during the throes of China’s coronavirus lockdown, New Oriental reported a 15.9% increase in revenue to $923.2 million, while operating income rose 22.4% and adjusted earnings per share jumped from $0.69 to $0.93. Those results beat estimates as analysts had expected revenue
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