The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example New Oriental Education & Technology Group Inc. (). Its share price is already up an impressive 130% in the last twelve months. On top of that, the share price is up 16% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading . In contrast, the longer term returns are negative, since the share price is 63% lower than it was three years ago.
Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
New Oriental Education & Technology Group went from making a loss to reporting a profit, in the last year.
The result looks like a strong improvement to us, so we’re not surprised the market likes the growth. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that New Oriental Education & Technology Group has improved its bottom line lately, but is it going to grow revenue? You could check out this free.
A Different Perspective
It’s good to see that New Oriental Education & Technology Group has rewarded shareholders with a total shareholder return of 130% in the last twelve months. That’s better than the annualised return of 3% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before deciding if you like the current share price, check how New Oriental Education & Technology Group scores on these.
Of course New Oriental Education & Technology Group may not be the best stock to buy. So you may wish to see this free
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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