New Oriental Education & Technology Group Earnings: Here’s Why Investors are Selling Shares Now

New Oriental Education & Technology Group (NYSE:EDU) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 1.84%.

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New Oriental Education & Technology Group Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 28.57% to $0.18 in the quarter versus EPS of $0.14 in the year-earlier quarter.

Revenue: Rose 25.24% to $218.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: New Oriental Education & Technology Group reported adjusted EPS income of $0.18 per share. By that measure, the company beat the mean analyst estimate of $0.12. It beat the average revenue estimate of $217.47 million.

Quoting Management: Michael Yu, New Oriental’s Chairman and Chief Executive Officer, commented, “We are pleased to report solid results for the third fiscal quarter with sustained top-line growth of 28.6%, which was well above the guidance range of 22% to 27% growth, as well as stronger than expected operating income growth of 35.9%, and profit growth of 25% year-over-year. Further, during the quarter we achieved notable progress in a number of important areas. For instance, we experienced encouraging improvements at our two largest schools in Beijing and Shanghai. As a result of an effective restructuring program over the past few months, these two schools recorded a combined increase in revenues of 17% and a combined increase in net income of 9% year-over-year. Moreover, we are encouraged by the year-on-year improvement in overall operating margin this quarter, following margin compression in the previous five quarters when we focused on rapid expansion of our learning center network. During the period, we continued to transition to our ‘Harvest the Market’ strategy and, as a result, recorded GAAP operating margin of 10.8%, compared to 10.2% in the same period a year ago.”

Key Stats (on next page)…

Revenue increased 31.7% from $165.91 million in the previous quarter. EPS increased to $0.18 in the quarter versus EPS of $-0.10 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.15 to a profit $0.13. For the current year, the average estimate has moved down from a profit of $0.92 to a profit of $0.76 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)