Gaotu Techedu Inc. Fundamental Analysis (NYSE: GOTU)
Gaotu Techedu Inc. Fundamental Analysis (NYSE: GOTU)
Gaotu Techedu Inc. (NYSE: GOTU) shows moderate financial fundamentals with a PE ratio of -16.17, profit margin of -5.03%, and ROE of -26.91%. The company generates $6.7B in annual revenue with strong year-over-year growth of 34.99%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 5.4/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze GOTU's fundamental strength across five key dimensions:
Efficiency Score
WeakGOTU struggles to generate sufficient returns from assets.
Valuation Score
ExcellentGOTU trades at attractive valuation levels.
Growth Score
ExcellentGOTU delivers strong and consistent growth momentum.
Financial Health Score
ModerateGOTU shows balanced financial health with some risks.
Profitability Score
WeakGOTU struggles to sustain strong margins.
Key Financial Metrics
Is GOTU Expensive or Cheap?
P/E Ratio
GOTU trades at -16.17 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, GOTU's PEG of -0.06 indicates potential undervaluation.
Price to Book
The market values Gaotu Techedu Inc. at 5.02 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at -22.43 times EBITDA. This is generally considered low.
How Well Does GOTU Make Money?
Net Profit Margin
For every $100 in sales, Gaotu Techedu Inc. keeps $-5.03 as profit after all expenses.
Operating Margin
Core operations generate -6.64 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-26.91 in profit for every $100 of shareholder equity.
ROA
Gaotu Techedu Inc. generates $-5.27 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Gaotu Techedu Inc. generates limited operating cash flow of $424.55M, signaling weaker underlying cash strength.
Free Cash Flow
Gaotu Techedu Inc. produces free cash flow of $251.61M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $0.69 in free cash annually.
FCF Yield
GOTU converts 4.59% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
-16.17
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-0.06
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.02
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.81
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.93
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.86
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.27
vs 25 benchmark
ROA
Return on assets percentage
-0.05
vs 25 benchmark
ROCE
Return on capital employed
-0.24
vs 25 benchmark
How GOTU Stacks Against Its Sector Peers
| Metric | GOTU Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | -16.17 | 21.89 | Better (Cheaper) |
| ROE | -26.91% | 635.00% | Weak |
| Net Margin | -5.03% | -2478.00% (disorted) | Weak |
| Debt/Equity | 0.93 | 0.82 | Neutral |
| Current Ratio | 0.86 | 2.26 | Weak Liquidity |
| ROA | -5.27% | 297.00% | Weak |
GOTU outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Gaotu Techedu Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
-15.52%
Industry Style: Defensive, Dividend, Low Volatility
DecliningEPS CAGR
77.27%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthFCF CAGR
-32.46%
Industry Style: Defensive, Dividend, Low Volatility
Declining