Critical Survey: China Online Education Group (COE) and New Oriental Education & Technology Group (EDU)

China Online Education Group (NYSE: COE) and New Oriental Education & Technology Group (NYSE:EDU) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Institutional and Insider Ownership

25.3% of China Online Education Group shares are held by institutional investors. Comparatively, 76.0% of New Oriental Education & Technology Group shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares China Online Education Group and New Oriental Education & Technology Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Online Education Group -92.66% N/A -71.07%
New Oriental Education & Technology Group 15.15% 17.32% 10.24%

Valuation and Earnings

This table compares China Online Education Group and New Oriental Education & Technology Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
China Online Education Group $60.24 million 4.27 -$74.14 million ($4.13) -3.10
New Oriental Education & Technology Group $1.80 billion 7.41 $274.45 million $1.85 45.72

New Oriental Education & Technology Group has higher revenue and earnings than China Online Education Group. China Online Education Group is trading at a lower price-to-earnings ratio than New Oriental Education & Technology Group, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

China Online Education Group has a beta of -0.7, meaning that its stock price is 170% less volatile than the S&P 500. Comparatively, New Oriental Education & Technology Group has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for China Online Education Group and New Oriental Education & Technology Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Online Education Group 0 0 0 0 N/A
New Oriental Education & Technology Group 2 0 7 0 2.56

New Oriental Education & Technology Group has a consensus price target of $87.71, suggesting a potential upside of 3.71%. Given New Oriental Education & Technology Group’s higher probable upside, analysts clearly believe New Oriental Education & Technology Group is more favorable than China Online Education Group.

Summary

New Oriental Education & Technology Group beats China Online Education Group on 11 of the 11 factors compared between the two stocks.

China Online Education Group Company Profile

China Online Education Group is engaged in providing online English language education services to students in the People’s Republic of China (the PRC). The Company operates an online education platform that provides online tutoring programs to students through the Internet. Its platform analyzes teachers’ teaching aptitudes, feedback and rating from students, as well as background, and recommends suitable teachers to students according to their respective characteristics and learning objectives. The Company develops and tailors its curriculum to its interactive lesson format. The Company offers various courses, which include Classic English and Classic English Junior that are focused on the development of English communication skills. The Company also offers various specialty courses that are focused at situation-based English education and test preparation needs, such as Business English and International English Language Testing System (IELTS) Speaking.

New Oriental Education & Technology Group Company Profile

New Oriental Education & Technology Group Inc. is a provider of private educational services in the People’s Republic of China (the PRC). The Company provides educational services under its New Oriental brand. The Company operates through seven segments, which include language training and test preparation, primary and secondary school education, online education, content development and distribution, pre-school education, overseas study consulting services and study tour. The Company offers a range of educational programs, services and products, consisting of English and other foreign language training, test preparation courses for admissions and assessment tests in the United States, the People’s Republic of China and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online education.

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