One-glance verdict
Undervalued
$15.11 our estimate vs market $2.38
Wall Street consensus: $3.77 (-75.1% lower than our fair-value estimate)
84% below our estimate, below the bear case
Fundamentals snapshot
Gaotu Techedu Inc.
GOTU · NYQ · Consumer Defensive · Education & Training Services
Current price
$2.38
52-week range
$1.40 - $2.87
Market cap
$559.43M
Balance sheet
Healthy
-12.60x Concerning
Net cash $325.52M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 40.9% last year.
- Reward Free cash flow was positive in 6/10 years.
- Risk Return on equity was -25.1% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from -4.7% to -9.0% over 3 years.
What this company does
Gaotu Techedu Inc.
Gaotu Techedu Inc. is a Chinese company that uses technology to offer learning services for everyone from young children to adults, covering everything from traditional lessons to help with college and adult education. Most of their money comes from selling these learning services, and it matters because it shows how successful they are at attracting and keeping students in a competitive education market.
How the company got here
Gaotu Techedu Inc. was founded in 2014 in Beijing, China, and was formerly known as GSX Techedu Inc.. The company is a technology-driven education provider that initially focused on online tutoring services. In recent years, following significant regulatory changes in China's private tutoring industry, Gaotu has adjusted its business model. This shift has led the company to broaden its focus towards adult education, professional development, and other related educational services. Gaotu has also been actively repurchasing its shares, with significant buybacks in 2025, demonstrating a commitment to returning value to shareholders.
What it actually does
Gaotu Techedu Inc. is a technology company that provides educational solutions aimed at enabling lifelong learning. They offer AI-powered learning tools and services for individuals from pre-school age through adulthood. The company combines experienced educators with AI-enhanced technology and content to create engaging learning experiences. These experiences are delivered through both online platforms and, increasingly, through offline learning centers. Gaotu emphasizes the use of artificial intelligence and big data analytics to personalize learning, improve teaching methods, and enhance operational efficiency across its business.
Learning Services
This is Gaotu's largest business segment, making up about 98% of its revenue. It encompasses a wide range of educational offerings, including traditional academic tutoring, non-academic skill-based tutoring, and programs for college students and adults. Gaotu utilizes an online, large-class format for many of its courses, believing it to be an effective way to share high-quality teaching resources across China. They also employ a dual-teacher system, with a lead instructor and supporting tutors, to manage larger classes and provide more individualized attention. This segment also includes services for professional development and examination preparation.
Educational Content and Digitalized Learning Products
This segment represents a smaller portion of Gaotu's revenue, accounting for about 1-2% of the total. It includes the creation and sale of educational materials such as books and digital learning tools. These products are designed to supplement the company's learning services, offering learners additional resources for personalized instruction and skill development. This part of the business also includes access to pre-recorded courses that students can use even after live instruction has ended.
What management is betting on now
Gaotu's current strategy heavily emphasizes profitable growth, with artificial intelligence (AI) at the core of its operations. The company is focused on refining its growth approach by prioritizing profitability and enhancing business health and operational efficiency through AI advancements. They are also expanding their offline presence, aiming for their offline business to surpass that of peers and achieve profitability. Gaotu is committed to disciplined management, risk control, and strengthening its organizational foundation to create long-term value for all stakeholders.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$10.93M
FY2025 Q4
$35.26M
Revenue
$878.98M
Net income
$-46.23M
Diluted EPS
-0.28
Operating cash flow
$59.50M
Free cash flow
$35.26M
Fetching…
Sources
Revenue
$623.84M
Net income
$-143.71M
Diluted EPS
-0.84
Operating cash flow
$35.35M
Free cash flow
$10.93M
Fetching…
Sources
Is it cheap or expensive?
Fair value $15.11 vs current price $2.38
Wall Street consensus is the average analyst price target: $3.77 (-75.1% lower than our fair-value estimate).
Our most-likely fair value is $15.11 a share — about 534.9% above today's price of $2.38, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $325.5M - more cash than debt. Interest coverage -12.6x.
Net debt
$-325.52M
Interest coverage
-12.60x
Gaotu Techedu Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
GOTU
BASELINE
Gaotu Techedu Inc.
Total debt $168.74M Interest coverage -12.60x This is the baseline the peer rows are being compared against.
Total debt $9.86M Interest coverage -194.67x Neither company has much profit cushion over interest right now.
Total debt $619.04M Interest coverage 38.27x This peer still has a real interest-payment cushion, while GOTU does not.
Total debt $153.47M Interest coverage 12.73x This peer still has a real interest-payment cushion, while GOTU does not.
Total debt $257.04M Interest coverage 3.62x This peer still has a real interest-payment cushion, while GOTU does not.
What you should know
The case for and against GOTU
2 Rewards
2 Risks
Rewards
-
Revenue grew 40.9% last year.
-
Free cash flow was positive in 6/10 years.
Risks
-
Return on equity was -25.1% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from -4.7% to -9.0% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
16.47x
P/B
3.57x
P/S
0.08x
EV/EBITDA
5.37x
PEG ratio
—
Profitability
How much profit each dollar creates
Gross margin
67.5%
Operating margin
-9.0%
Net margin
-5.0%
ROE
-25.1%
ROA
-4.5%
Health
Liquidity and balance-sheet strength
Debt / equity
1.07x
Current ratio
0.86x
Quick ratio
0.73x
Total debt
$168.74M
Total cash
$494.26M
Growth
How the business has been compounding
Revenue TTM
$2.28B
Revenue 5Y CAGR
-3.9%
EPS TTM
-0.12
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$152.57M
Free CF TTM
$35.26M
FCF margin
1.5%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
—