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Is It Too Late to Buy EDU Stock After Recent Market Moves?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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New Oriental Education & Technology Group Inc. Sponsored ADR has seen a notable price increase as its stocks have traded up by 7.42 percent on Tuesday. This positive market movement is likely influenced by several key developments, including strong earnings reports and strategic educational initiatives aimed at expanding its market presence. Investors appear optimistic about the company’s future growth prospects.

  • The company announced an on-market buyback of up to 16.5 million shares worth AU$1 million over a 12-month period and entered into buyback agreements with two shareholders.
  • Shares fluctuated, hitting a high of $65.39 before closing at $64.72, following the buyback news and a notable surge in volume.
  • Recent earnings reports showed a mixed picture, providing insights into the company’s revenue trend and profitability margins.

Candlestick Chart

Live Update at 11:18:09 EST: On Tuesday, September 24, 2024 New Oriental Education & Technology Group Inc. Sponsored ADR representing 10 (Cayman Islands) stock [NYSE: EDU] is trending up by 7.42%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of EDU’s Recent Financials

EDU has been quite a player in the educational services sector. The recent financial report tells a story of resilience and strategic moves. The company reported a revenue of approximately $2,997,760,000, but what’s interesting is the revenue growth trend over the past few years. In the last three years, there has been a -27.16% change, and a -10.79% over the last five years. This decline hints at challenges but also potential turnarounds through innovative strategies.

Now let’s talk about ratios. With a P/E ratio of 34.61, EDU stands out in terms of valuation metrics. The enterprise value stands at about $9.97 billion. Notably, the company’s price-to-sales ratio is 7.21, and return on assets is around zero, indicating room for operational improvements.

Shifting our focus to financial strength, the leverage ratio of 1.8 highlights how the company balances its debt and equity. The long-term debt to capital is only 0.08, indicating a solid foundation with minimal long-term obligations.

During Q3 2023, the company showcased a varied balance sheet. With total assets of $6,392,458,000,000 and cash equivalents surging to $1.77 billion. Net PPE stood at $363,081,000. These numbers suggest that EDU is building up a strong capital base to weather future storms.

The Impact of Buyback and Market Sentiment

In the last few days, EDU’s stock has seen some volatility. From opening at $60.54 on Sep 20, 2024, to closing at $64.72 on Sep 24, 2024, there’s been a rollercoaster ride. The high on Sep 24, 2024, at $65.39, significantly spikes interest in the stock, driven by buyback news and market dynamics.

More Breaking News

The buyback plan itself signals strong confidence from the management. It resembles a lighthouse in rough seas, guiding investors with a beacon of assurance. When a company buys back its shares, it’s often interpreted as a move to bolster stock prices and show strong financial health. For EDU, entering into agreements for 14.7 million shares highlights their intent to return value to shareholders, which can often act as a catalyst for future price appreciation.

Market Movements and Future Prospects

The secondary question is, can you make a big gain by buying EDU stock now? The recent past shows fluctuations, but there’s a story of steady rise through market sentiments. Short-term candles leading up to Sep 24, 2024, showed an upward trend, hitting highs and slightly peeling off by the day’s end.

Investors hunting for bargains would watch the intraday movements between $65.14 to $64.72 very closely. The uptick in share buyback plans makes it an attractive proposition for short-term traders seeking volatility gains.

Long-term holders might need to dig deeper, considering mixed results from earnings. The revenue dip paints a picture of struggles on one side, but the strategies like share buybacks present a counter-narrative of opportunities and possible rebounds.

Wrapping up the Financial Landscape

To stay buoyant, EDU needs to navigate the education sector’s tumultuous waters carefully. With shareholders’ agreements and a strategic on-market buyback, the company projects confidence, potentially drawing more investor interest.

Though catching the exact wave would need a precise reading of market movements and timing, there’s a broad canvas of opportunities that could make EDU worth watching.

For those who have ridden the earlier phases of growth, it’s crucial to keep an eye on how these buybacks manifest in the pricing trends and whether the upcoming quarterly results will echo positive market sentiment or spell new challenges.

In conclusion, EDU’s recent market dance offers a tapestry rich with buying signals and strategic company moves underlining its broader market narrative, promising an engaging, albeit cautious, potential for gains.

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The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”