New Oriental Education & Technology Group (NYSE:EDU) has been analyzed for its potential to multiply in value over the long term based on its return on capital employed (ROCE) trend. ROCE measures the amount of pre-tax profits a company can generate from the capital employed in its business. While New Oriental Education & Technology Group’s ROCE of 9.2% is in line with the industry average, it has remained stagnant over the years despite a 30% increase in capital employed.
This lackluster performance, coupled with a 53% decline in stock price over the last five years, suggests that the company may not have the potential to be a multi-bagger investment. The company’s inability to deploy funds into high return investments is evident, as it continues to generate the same low rate of return as before.
While New Oriental Education & Technology Group may be trading at an attractive price in other respects, the analysis indicates that it may not have the makings of a stock that can significantly increase in value over time. Investors are advised to consider other factors when evaluating potential investment opportunities.
This article by Simply Wall St provides a general analysis based on historical data and analyst forecasts, and is not intended to be financial advice. Investors are encouraged to conduct their own research and consider their individual financial situation before making investment decisions.
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