Youdao (NYSE:DAO) and New Oriental Education & Tech Grp (NYSE:EDU) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Youdao and New Oriental Education & Tech Grp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Youdao 1 0 4 0 2.60
New Oriental Education & Tech Grp 0 0 9 1 3.10

Youdao currently has a consensus target price of $25.60, indicating a potential upside of 11.79%. New Oriental Education & Tech Grp has a consensus target price of $144.78, indicating a potential upside of 23.13%. Given New Oriental Education & Tech Grp’s stronger consensus rating and higher possible upside, analysts clearly believe New Oriental Education & Tech Grp is more favorable than Youdao.

Institutional & Insider Ownership

1.7% of Youdao shares are owned by institutional investors. Comparatively, 79.6% of New Oriental Education & Tech Grp shares are owned by institutional investors. 15.5% of New Oriental Education & Tech Grp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Youdao and New Oriental Education & Tech Grp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Youdao $1.67 billion 1.54 -$86.40 million ($8.45) -2.71
New Oriental Education & Tech Grp $3.10 billion 6.02 $238.07 million $1.50 78.39

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

Profitability

This table compares Youdao and New Oriental Education & Tech Grp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Youdao N/A N/A N/A
New Oriental Education & Tech Grp 12.24% 16.76% 7.63%

Summary

New Oriental Education & Tech Grp beats Youdao on 14 of the 14 factors compared between the two stocks.

Youdao Company Profile

Youdao, Inc., an Internet technology company, provides online services in content, community, communication, and commerce in China. The company provides various learning content, applications, and solutions, which covers topics and targets people from various age groups for their learning needs through its websites and mobile applications. Its learning services and products primarily include online courses, fee-based premium services, and others, as well as online marketing services. The company also provides sales of smart devices and solutions, and technical supporting to the VIE; consulting services; and online learning services, as well as online marketing services. Youdao, Inc. was founded in 2006 and is based in Hangzhou, China.

New Oriental Education & Tech Grp Company Profile

New Oriental Education & Technology Group Inc. provides private educational services under the New Oriental brand in the People's Republic of China. It operates through Language Training and Test Preparation Courses, and Others segments. The company offers test preparation courses to students taking language and entrance exams used by educational institutions in the United States, the People's Republic of China, and the Commonwealth countries; and after-school tutoring courses for middle and high school students to achieve better scores on entrance exams for admission into high schools or higher education institutions, as well as for children to teach English. It also provides language training courses, including English, as well as other foreign languages, such as German, Japanese, French, Korean, Italian, and Spanish; operates a full-time private primary and secondary school in Yangzhou seeking a full curriculum taught in Chinese and English; develops and edits educational materials for language training and test preparation comprising books, software, CD-ROMs, magazines, and other periodicals; and offers online education programs that include college, K-12, and pre-school education. In addition, the company offers overseas studies consulting; pre-school education; and a pilot program that permits third parties in small cities to provide its English and kindergarten programs, as well as overseas study tour services. As of May 31, 2018, it offered educational programs, services, and products to students through a network of 87 schools, 994 learning centers, and 18 bookstores. The company was founded in 1993 and is headquartered in Beijing, the People's Republic of China.

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