New Oriental Education & Technology Group Whiffs on Earnings

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New Oriental Education & Technology Group (NYS: EDU) reported earnings on Jan. 17. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Nov. 30 (Q2), New Oriental Education & Technology Group beat expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue increased significantly, and earnings per share improved significantly.

Gross margins increased, operating margins shrank, and net margins improved.

Revenue details
New Oriental Education & Technology Group tallied revenue of $132 million. The nine analysts polled by S&P Capital IQ predicted a top line of $129 million. Sales were 38% higher than the prior-year quarter's $96 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.05. The six earnings estimates compiled by S&P Capital IQ forecast $0.06 per share on the same basis. GAAP EPS of $0.02 for Q2 were 100% higher than the prior-year quarter's $0.01 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 53.7%, 30 basis points better than the prior-year quarter. Operating margin was -3%, 90 basis points worse than the prior-year quarter. Net margin was 2.5%, 60 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $177 million. On the bottom line, the average EPS estimate is $0.23.

Next year's average estimate for revenue is $758 million. The average EPS estimate is $1.00.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 723 members out of 876 rating the stock outperform, and 153 members rating it underperform. Among 241 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 173 give New Oriental Education & Technology Group a green thumbs-up, and 68 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on New Oriental Education & Technology Group is outperform, with an average price target of $34.92.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of New Oriental Education & Technology Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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