New Oriental Education & Technology Group saw its stock slip 3.4% to US$56.58, even though the headline number pointed in the opposite emotional direction for many investors. Revenue in the latest quarter reached US$1,529.5m and non GAAP operating income came in at US$110m, which management framed as part of a broader profitability push.

The tension today sits squarely between a premium P/E of 18.9x and a business still delivering earnings growth and higher net profit margins. The price fall looks less like a verdict on collapse and more like a valuation check after a strong run into the print.

Is New Oriental Education & Technology Group trading at a steep discount that current earnings do not fully explain, or is the premium P/E already pricing everything in? Compare the gap using the valuation analysis for New Oriental Education & Technology Group.

FY 2026 Earnings Summary

• Revenue (Q4 FY 2026 vs. Q4 FY 2025): US$1,529.5m vs. US$1,243.2m (up about 23%)
• Net Income (Q4 FY 2026 vs. Q4 FY 2025): US$62.2m vs. US$7.1m (a very large increase, close to 8x)
• Basic EPS (Q4 FY 2026 vs. Q4 FY 2025): US$0.40 per share vs. US$0.04 per share (a very large increase, close to 8x)
• Non GAAP Operating Income (Q4 FY 2026 vs. Q4 FY 2025): US$110.0m vs. about US$81.7m (up 34.7%)

Prefer clean charts over scanning through another wall of earnings figures? See New Oriental Education & Technology Group's valuation picture laid out clearly in our company report for New Oriental Education & Technology Group.

New Oriental bull story: growth engines versus earnings mix

Bulls argue New Oriental Education & Technology Group is turning AI empowered learning, OMO delivery and new services into higher quality growth and improving margins. Q4 revenue of US$1,529.5m, up 23% year on year, and non GAAP operating income up 34.7% to US$110m back the claim that operating leverage from these rollouts is starting to show. The swing from operating loss to income and net income of US$62.2m, roughly 8x higher than a year ago, supports the profitability recovery story. Rising deferred revenue to US$2.243b also lines up with the thesis of better revenue visibility. The main miss for the bullish narrative is non GAAP net income, which fell about 10.5% year on year. This suggests mix, investment spend or non cash items are still weighing on the clean earnings line even as operating metrics improve.

Bear case on margins, mix and capital returns tested

Bears focus on rising competition, execution risk in newer ventures and the chance that margins plateau once the easy efficiency gains are used up. This quarter does not strongly validate that concern at the operating level. Non GAAP operating income grew faster than revenue and the group moved from operating loss to profit. This runs against fears of margin pressure. However, the decline in non GAAP net income shows that below the operating line, earnings quality is more mixed than headline growth suggests. Worries about capital allocation also look less supported. Around US$274m of buybacks already executed and a FY27 capital return plan of about US$500m indicate management is actively returning surplus cash. The 3.4% share price fall after results implies some investors still question how durable these trends are rather than reacting to outright deterioration.

Compare whether New Oriental Education & Technology Group's earnings recovery story and capital returns line up with institutional expectations, and see if analysts think the recent 3.4% share price fall is a reset or the start of a new script. See the consensus price target analysis for New Oriental Education & Technology Group

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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.