Gaotu Techedu Inc. (GOTU) Shares: Are They Risky Or Cheap?

Gaotu Techedu Inc. (NYSE:GOTU) finished Wednesday with an addition of $0.09 to close at $3.84, an upside of 2.40 percent. An average of 18,291,439 shares of common stock have been traded in the last five days. There was a gain of $0.54 in the past week. The last 20 days have seen an average of 12,881,555 shares traded, while the 50-day average volume stands at 11,410,647.

GOTU stock has increased by 54.84% in the last month. The company shares reached their 1-month lowest point of $2.26 on 09/20/21. With the stock rallying to its 52-week high on 01/27/21, shares of the company touched a low of $2.25 and a high of $149.05 in 52 weeks. In spite of this, the price is down -97.42% from the 52-week high.


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Valuation Metrics

Gaotu Techedu Inc. (GOTU) has a trailing price-to-earnings (P/E) ratio of 24.50 for the broader industry and 24.47 for the sector. In the last five years, Gaotu Techedu Inc.’s PE ratio has ranged between 1567.18 and 152.51. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 0.36, the price-to-book (PB) ratio at 1.76.

The quick ratio of Gaotu Techedu Inc. for the three months ended June 29 was 1.50, and the current ratio was 1.50, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.00 and a total debt to equity ratio of 0.00 for the quarter ending June 29. Gaotu Techedu Inc.’s EBITDA margin for the year ending June 29 is -23.84%, while its operating margin for the same period stands at -49.30%. Its gross profit as reported stood at $821.79 million compared to revenue of $1.09 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Gaotu Techedu Inc.’s return on assets was -49.50%. For the broader industry, ROE averaged 11.73 over the past year.

Earnings Surprise

The analyst consensus anticipated Gaotu Techedu Inc.’s latest quarter earnings to come in at -$0.22 per share, but it turned out to be -$0.46, a -109.10% surprise. For the quarter, EBITDA amounted to -$124.15 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Gaotu Techedu Inc. (GOTU) price momentum. RSI 9-day as of the close on 13 October was 67.39%, suggesting the stock is Neutral, with historical volatility in this time frame at 122.25%.

As of today, GOTU’s price is $3.66 +16.36% or $0.54 from its 5-day moving average. GOTU is currently trading +58.02% higher than its 20-day SMA and -82.27% lower than its 100-day SMA. However, the stock’s current price level is +3.50% above the SMA50 and -92.46% below the SMA200.

The stochastic %K and %D were 66.00% and 73.69%, respectively, and the average true range (ATR) was 0.44. With the 14-day stochastic at 60.64% and the average true range at 0.43, the RSI (14) stands at 60.42%. The stock has reached 0.49 on the 9-day MACD Oscillator while the 14-day reading was at 0.61.

Analyst Ratings

Goldman downgraded Gaotu Techedu Inc. (NYSE: GOTU) to a a Sell rating in its most recent analyst report. Previously, the stock was rated as a a Neutral.The consensus rating for Gaotu Techedu Inc. (GOTU) among analysts is Underweight. According to current brokerage recommendations, 3 brokerage firms advise that investors sell GOTU, while 0 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 0 analysts, while 1 others rate it as a “buy”.

What is GOTU’s price target for the next 12 months?

Analysts predict a range of price targets between $12.90 and $26.52, with a median target of $16.18. Taking a look at these predictions, the average price target given by analysts for Gaotu Techedu Inc. (GOTU) stock is $17.95.

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