The past week presented a complex picture for investors in New Oriental Education & Technology Group. The Chinese education provider executed a significant capital return to shareholders, yet this move was set against a backdrop of diverging analyst views and notable institutional selling.
Capital Return and Strategic Context
On Friday, December 5, the company distributed the first installment of its previously announced special dividend. Shareholders received a payment of $0.60 per American Depositary Share (ADS). This payout initiates a broader capital return program, under which New Oriental has committed to distributing a minimum of 50% of its prior fiscal year’s net profit to shareholders by fiscal year 2026.
This shareholder return comes during a period of substantial business transformation. The company is actively diversifying its revenue streams, shifting focus from its core K-12 tutoring services toward new segments. These include test preparation for students studying abroad, educational consulting services, and other learning initiatives. Early results from this strategic shift were visible in the October quarterly report, which showed a 6.1% year-over-year increase in net revenue to $1.52 billion. However, net profit for the same period experienced a slight contraction of 1.9%.
Divergence in Analyst Ratings
Market experts are sending conflicting signals regarding the stock’s outlook. The current consensus rating stands at “Hold,” but this masks significant disagreement among major firms.
Should investors sell immediately? Or is it worth buying New Oriental Education & Technology?
In late October, JPMorgan Chase & Co. upgraded its stance on New Oriental to “Overweight,” expressing confidence in the company’s direction. Conversely, Zacks Research took a bearish turn in early November, downgrading the shares to a “Strong Sell” rating. Citigroup maintains a “Buy” recommendation but demonstrated caution in September by reducing its price target for the stock. This lack of consensus highlights prevailing uncertainty about the firm’s future profitability within China’s evolving regulatory landscape for education services.
Institutional Activity and Forthcoming Test
Adding another layer to the narrative, investment firm Legal & General Group Plc reported a reduction in its stake. During the second quarter, the institution sold 29,212 shares, decreasing its holding by 23.3%. Its remaining position of 96,359 shares is valued at approximately $5.19 million.
The next critical milestone for New Oriental is scheduled for January 21, 2026. On that date, the company will release financial results for its second fiscal quarter, which concluded on November 30. This earnings report is highly anticipated, as it is expected to provide a clearer assessment of the progress and operational efficiency of the company’s ongoing strategic repositioning.
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