Yahoo Finance All You Need To Know About New Oriental Education & Technology Group Inc’s (NYSE:EDU) Financial Health
Investors looking for stocks with high market liquidity and zero debt on the balance sheet should consider New Oriental Education & Technology Group Inc (NYSE:EDU). With a market valuation of US$11.74b, EDU is a safe haven in times of market uncertainty due to its strong balance sheet. These firms won’t be left high and dry if liquidity dries up, and they will be relatively unaffected by rises in interest rates. Assessing the most recent data for EDU, I will take you through the key ratios to measure financial health, in particular, its solvency and liquidity.
View our latest analysis for New Oriental Education & Technology Group
Does EDU face the risk of succumbing to its debt-load?
What is considered a high debt-to-equity ratio differs depending on the industry, because some industries tend to utilize more debt financing than others. Generally, large-cap stocks are considered financially healthy if its ratio is below 40%. For New Oriental Education & Technology Group, investors should not worry about its debt levels because the company has none! This means it has been running its business utilising funding from only its equity capital, which is rather impressive. Investors’ risk associated with debt is virtually non-existent with EDU, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Can EDU pay its short-term liabilities?
Since New Oriental Education & Technology Group doesn’t have any debt on its balance sheet, it doesn’t have any solvency issues, which is a term used to describe the company’s ability to meet its long-term obligations. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. With current liabilities at US$1.75b, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.68x. Usually, for Consumer Services companies, this is a suitable ratio as there’s enough of a cash buffer without holding too much capital in low return investments.
Next Steps:
EDU has zero debt as well as ample cash to cover its near-term liabilities. Its strong balance sheet reduces risk for the company and shareholders. This is only a rough assessment of financial health, and I’m sure EDU has company-specific issues impacting its capital structure decisions. I suggest you continue to research New Oriental Education & Technology Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for EDU’s future growth? Take a look at our free research report of analyst consensus for EDU’s outlook.
Valuation: What is EDU worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EDU is currently mispriced by the market.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
