Shares of New Oriental Education & Technology Group Inc. (EDU) reached a 52-week high of $32.00 on Monday, Dec 31, 2013, due to the solid fiscal second quarter 2014 guidance provided by the company. The second quarter results are slated to be announced on Jan 21. The closing price of the education company on Dec 31, 2013, was $31.50, representing a solid year-to-date return of 60.1%.
Share Price Drivers
Oriental Education offers private educational services in China. Share price of this educational service provider was driven by the company‘s expectation of strong enrollment in the upcoming quarter. At its first quarter conference call, the company revealed that demand has been strong through September and first half of October 2013. In fact, the company recorded an 8.3% increase in enrollment for the six week period.
The company expects strong enrollment growth in the upcoming three quarters on the back of higher K-12 after school tutoring enrollment. Increase in K-12 after school tutoring enrollment can be attributed to the final examinations scheduled at the end of autumn and spring semesters and for the Gaokao and the Zhongkao examinations in early June.
The company expects net revenue in the second quarter of fiscal 2014 to increase in the range of 22% to 27% and be within the range of $202.4 million to $210.7 million. The Zacks Consensus estimate is $205 million for the quarter. In addition, the company intends to increase its research and development (R&D) investments in order to improve its teaching quality and course materials.
Another education company, Universal Technical Institute, Inc. (UTI) also reported better than expected new enrollment in its fiscal fourth quarter of 2013 due to the recovery in the automobile industry.
New Oriental Education & Technology Group carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the education sector include Xueda Education Group (XUE), and Apollo Education Group, Inc. (APOL). Both the companies hold Zacks a Rank #2 (Buy).