...

New Oriental Education & Technology Group Inc. (EDU) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

Popular:

New Oriental Education & Technology Group Inc. (EDU)

View Full Profile →

Intrinsic Value (DCF)

Current$57.71
→
Intrinsic$76.45
+32%
$53.89$76.45$119.33
Market implies 1% growth for 5 years
DCF analysis suggests EDU could have 32% upside at 8% growth — verify assumptions match your view.
At $58, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $54 → Bull $119. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$90$97$106$115
10%$65$71$76$83
12%$52$56$60$65
14%$43$47$50$54

Bull Case

  • Bull case ($119) offers 107% upside at 10% growth, 9% discount
  • 25% margin of safety vs. base case estimate
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($54) implies 7% downside at 6% growth, 12% discount
Loading charts...

5-Year Free Cash Flow Projection

Year 1$688.37M
Year 2$743.44M
Year 3$802.92M
Year 4$867.15M
Year 5$936.52M
Terminal$13.78B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$637.38MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Related Analysis

Full Stock ProfileCompare EDU vs AAPLStock Screener

Frequently Asked Questions

Is EDU stock undervalued or overvalued?
🟢 UNDERVALUED

EDU trades at $57.71 vs. our DCF-derived intrinsic value of $76.45, implying +35% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of EDU's future cash flows. The bear case ($56.75) still suggests upside, providing margin of safety.

What is EDU's intrinsic value?

Using a 5-year DCF model: Base FCF of $637M, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-809M net debt and dividing by 0.16B shares: Bear $56.75 | Base $76.45 | Bull $102.78. Current price $57.71 implies +35% to base case.

How is EDU's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($11.57B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.