Remember New Oriental Education & Technology Group, Inc. (NYSE/EDU)? This is a company that was first mentioned in this column in November 2006. At that time, the stock was trading around $24.00 per share. Recently, the stock hit a new record high of $84.70 per share and the company’s market capitalization is now somewhere over $12.0 billion.
When I first wrote about this company, I said it was a great investment prospect because the Chinese people were beginning to invest heavily in their own education. In New Oriental’s case, this company specializes in teaching students English as well as test preparation courses so students can get into universities. The company’s timing could not have been more perfect.
New Oriental now boasts over three million student enrollments. Currently, the company operates a network of 37 schools, 149 learning centers, and 13 New Oriental bookstores, employing over 1,700 teachers in 24 cities. The company’s online network currently also boasts some two million registered users.
In its fiscal first quarter ended August 31, 2007, the company’s revenues grew an impressive 43% to over eighty-one million dollars.
According to the company, total sales from educational programs and services for the first fiscal quarter were more than seventy-six million dollars, representing a 40% increase year-over-year. Total student enrollments in language training and test preparation courses in the first quarter of fiscal year 2008 increased by 31% to approximately 440,500.
Net income for the quarter was a substantial thirty-three million dollars, representing a whopping 55% increase over net income generated in the first quarter of fiscal year 2007.
During the first quarter, the company opened two new schools and 17 new learning centers, bringing its total number of schools to 37, and learning centers to 149.
This stock is up some 250% in just under a year. With a market capitalization over $12.0 billion, this company is clearly overvalued. Yet, the fundamentals for the company’s business are so strong that this stock just might get to $100.00 per share in the not-too-distant future.