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Why New Oriental Education Stock Popped Today

Steve Symington, The Motley Fool

What happened

Shares of New Oriental Education & Technology Group (NYSE: EDU) climbed 9.2% today after the China-based private educational-services company announced fiscal fourth-quarter 2019 results.

More specifically, New Oriental Education's quarterly revenue climbed 20.2% year over year, to $842.9 million -- well above guidance provided in April for between $821 million and $841 million -- which translated to adjusted net income of $95.1 million, or $0.60 per American depositary share (ADS).

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IMAGE SOURCE: GETTY IMAGES.

So what

New Oriental executive chairman Michael Yu said the company is "delighted" with the quarter, pointing to "continued robust growth on the top line as well as improvement in operating margin."

New Oriental's growth was broad-based, including a 28.5% increase in sales from its core K-12 after-school tutoring business, which rose 28.5% (or 37.2% as measured in Chinese Renminbi), 27.2% growth from the U-Can middle- and high-school all-subjects after-school tutoring segment, and a 31% increase from its POP Kids program. The company added a net total of 65 learning centers in existing cities during the quarter, as well as three new offline training schools and one learning center in new cities, growing its total classroom area by 24% for the full fiscal year, as measured in square meters.

"Our capacity grew steadily throughout the entire fiscal year, in line with our expansion plan, while we continue to emphasize on improving our operational efficiency," added CFO Stephen Zhihui Yang.

Now what

For the first quarter of fiscal 2020, New Oriental sees total net revenue climbing from 22% to 25%, or to a range of $1.0505 billion to $1.0755 billion. While we don't usually pay close attention to Wall Street's forecasts, most analysts were modeling fiscal first-quarter growth near the low end of that range.

After coupling that guidance with New Oriental Education's straightforward quarterly beat to end fiscal 2019 -- even with shares already up around 80% so far in 2019 -- it was no surprise to see the stock soaring again today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends New Oriental Education & Technology Group. The Motley Fool has a disclosure policy.