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Shares of New Oriental Education & Technology Group Inc. (EDU, Financials) dropped 23.85% to $46.33 as of 3:37 p.m. GMT-5 on Jan. 21, following the company's fiscal second-quarter results that failed to meet market expectations.
Although the corporation claimed a 19.4% year-over-year rise in net income to $1.04 billion, the results fell short of expectations of analysts. Operating income dropped 9.8% annually to $19.3 million; net income increased 6.2% to $31.9 million. To $35.5 million, non-GAAP net income fell 29.1% however. Comparatively to last year, earnings per ADS were $0.20 basic and $0.19 diluted.
The sharp drop in the stock shows investor unhappiness in the company's failure to live up to expectations even with steady expansion in key education sectors. While domestic test preparation for adults and college students expanded by 34.9%, overseas test preparation services climbed by 21.1%.
With a 9.3% year-over-year drop, East Buy, the e-commerce affiliate of the corporation, reported $304.9 million in income for the six months ending Nov. 30, 2024.
As of Nov. 30, 2024, New Oriental's cash and short-term investments came to $4.8 billion; deferred income increased 19.2% year over year to reach $1.96 billion. Excluding East Buy, the business estimated third-quarter net income to range between $1.01 billion and $1.03 billion, an increase of 18% to 21% year over-year.
This article first appeared on GuruFocus.