Is EDU's Q1 2025 EPS decline a sign of long-term trouble?

**New Oriental's Q1 2025 EPS decline does not necessarily indicate long-term trouble**. The $0.15 EPS in Q1 2025 is a slight decrease from the previous quarter's EPS, which may be influenced by short-term factors rather than long-term trends. Here's an analysis to support this view:

1. **Short-Term Variations Are Normal**: EPS can fluctuate from quarter to quarter due to seasonal factors, market conditions, or company-specific events. A decline in one quarter does not automatically imply a trend of declining profitability.
2. **Revenue Growth in Q2**: New Oriental's total revenue for Q2 2025 increased by 19.4% year-over-year, reaching $1.04 billion. This growth suggests that the company's overall performance is positive, and the EPS decline may not be indicative of long-term issues.

3. **Strategic Adjustments**: New Oriental has been making strategic adjustments, such as exploring offline channels through vending machines, which could be a temporary disruption as the new channels are being established. These adjustments can impact short-term financial metrics without affecting the long-term outlook.
4. **Financial Resilience**: The company's net income increased by 6.2% year-over-year to $31.85 million, indicating financial resilience. This resilience is a positive sign, suggesting that the company can navigate short-term challenges.

5. **Market Position and Innovation**: New Oriental continues to be a significant player in the Chinese private education sector, offering diverse educational services. The company's innovation in reaching new customer bases and its commitment to educational services position it well for long-term growth.

In conclusion, while a decline in EPS can be concerning, it is important to consider the broader context of New Oriental's financial performance, strategic initiatives, and market position. The EPS decline in Q1 2025 may not be a sign of long-term trouble, and further analysis of the company's strategic direction and financial health is needed to make a more informed assessment.