Gaotu Techedu Inc. (NYSE: GOTU)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001768259
Market Cap 513.74 Mn
P/B 2.59
P/E -9.76
P/S 0.63
ROIC (Qtr) -187.18
Div Yield % 0.00
Rev 1y % (Qtr) 30.69
Total Debt (Qtr) 74.72 Mn
Debt/Equity (Qtr) 0.38
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About

Gaotu Techedu Inc., a leading player in the online education industry in China, trades under the stock symbol GOTU. The company specializes in delivering technology-driven educational services and products, including online courses, educational content, and digitalized learning tools. Gaotu Techedu Inc. operates in the online education sector, providing services to students of all ages. Its offerings range from traditional learning services, non-academic tutoring services, college student and adult education services, to educational content and...

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Investment thesis

Bull case

  • Healthy cash reserves of 62.36M provide 2.35x coverage of short-term debt 26.53M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 711.98M provides 9.53x coverage of total debt 74.72M, indicating robust asset backing and low credit risk.
  • Robust tangible asset base of 711.98M provides 66.43x coverage of working capital 10.72M, indicating strong operational backing.
  • Long-term investments of 70.28M provide solid 1.46x coverage of long-term debt 48.20M, indicating strategic financial planning.
  • R&D investment of 85.20M represents healthy 0.34x of deferred revenue 249.04M, indicating strong future innovation pipeline.

Bear case

  • Investment activities of 0 provide weak support for R&D spending of 85.20M, which is 0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Short-term investments of 294.38M significantly exceed cash reserves of 62.36M, which is 4.72x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.
  • Operating cash flow of 0 provides insufficient coverage of deferred revenue obligations of 249.04M, which is 0x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 0 provides minimal -0x coverage of tax expenses of (434550.56), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Short-term investments of 294.38M represent 27.47x of working capital 10.72M, suggesting potentially excessive financial asset allocation versus operational needs.

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets -0.24 0.71
EV to Cash from Ops. EV/CFO -4.96 6.80
EV to Debt EV to Debt -2.35 11.15
EV to EBIT EV/EBIT 3.30 112.78
EV to EBITDA EV/EBITDA 1.14 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF -15.98 5.57
EV to Market Cap EV to Market Cap -0.34 582,173.64
EV to Revenue EV/Rev -0.21 1.74
Price to Book Value [P/B] P/B 2.59 -3.80
Price to Earnings [P/E] P/E -9.76 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.69
Interest Coverage Interest Coverage 0.00 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -48.53 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 63.69 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 63.50 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 63.50 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 61.43 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 0.00 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 47.15 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.16 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.15 0.73
Current Ratio Curr Ratio (Qtr) 1.03 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.38 3.83
Interest Cover Ratio Interest Cover Ratio 0.00 53.05
Times Interest Earned Times Interest Earned 0.00 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) -46.01 -82.13
EBT Margin % EBT Margin % (Qtr) -6.46 -47.07
Gross Margin % Gross Margin % (Qtr) 67.50 50.48
Net Profit Margin % Net Margin % (Qtr) -6.40 -48.61