New Oriental Education & Technology Group (NYSE: EDU) and Tarena International (NASDAQ:TEDU) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.

Volatility and Risk

New Oriental Education & Technology Group has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500. Comparatively, Tarena International has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for New Oriental Education & Technology Group and Tarena International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Oriental Education & Technology Group 0 2 7 0 2.78
Tarena International 0 4 2 0 2.33

New Oriental Education & Technology Group presently has a consensus price target of $74.80, indicating a potential downside of 17.81%. Tarena International has a consensus price target of $20.10, indicating a potential upside of 42.15%. Given Tarena International’s higher probable upside, analysts clearly believe Tarena International is more favorable than New Oriental Education & Technology Group.

Institutional and Insider Ownership

76.3% of New Oriental Education & Technology Group shares are owned by institutional investors. Comparatively, 36.6% of Tarena International shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Tarena International pays an annual dividend of $0.14 per share and has a dividend yield of 1.0%. New Oriental Education & Technology Group does not pay a dividend. Tarena International pays out 23.7% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares New Oriental Education & Technology Group and Tarena International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
New Oriental Education & Technology Group $1.80 billion 7.97 $310.66 million $1.74 52.30
Tarena International $248.63 million 3.20 $44.28 million $0.59 23.97

New Oriental Education & Technology Group has higher revenue and earnings than Tarena International. Tarena International 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.

Profitability

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

Net Margins Return on Equity Return on Assets
New Oriental Education & Technology Group 15.25% 17.02% 10.29%
Tarena International 13.74% 15.30% 11.04%

Summary

New Oriental Education & Technology Group beats Tarena International on 12 of the 15 factors compared between the two stocks.

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.

Tarena International Company Profile

Tarena International, Inc. (Tarena International) is a holding company. The Company, through its subsidiaries, provides professional education services, including professional information technology (IT) training courses and non-IT training courses across the People’s Republic of China (PRC). It operates through training segment. It offers courses in over 10 IT subjects and approximately three non-IT subjects, and over two kid education programs. It offers an education platform that combines live distance instruction, classroom-based tutoring and online learning modules. It complements the live instruction and tutoring with its learning management system, Tarena Teaching System (TTS). TTS has over five core functions, featuring course content, self-assessment exams, student and teaching staff interaction tools, student management tools and an online student community. In addition, the Company offers Tongcheng and Tongmei featuring IT training courses and non-IT training courses.

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