Announcing: New Oriental Education & Technology Group (NYSE:EDU) Stock Soared An Exciting 386% In The Last Five Years
New Oriental Education & Technology Group Inc. (NYSE:EDU) shareholders might be concerned after seeing the share price drop 11% in the last month. But that does not change the realty that the stock's performance has been terrific, over five years. To be precise, the stock price is 386% higher than it was five years ago, a wonderful performance by any measure. So it might be that some shareholders are taking profits after good performance. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.
Check out our latest analysis for New Oriental Education & Technology Group
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over half a decade, New Oriental Education & Technology Group managed to grow its earnings per share at 12% a year. This EPS growth is lower than the 37% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 66.96.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that New Oriental Education & Technology Group has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between New Oriental Education & Technology Group's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for New Oriental Education & Technology Group shareholders, and that cash payout contributed to why its TSR of 389%, over the last 5 years, is better than the share price return.
A Different Perspective
It's good to see that New Oriental Education & Technology Group has rewarded shareholders with a total shareholder return of 33% in the last twelve months. However, the TSR over five years, coming in at 37% per year, is even more impressive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for New Oriental Education & Technology Group you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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