Reassessing Youdao (NYSE:DAO): Is the Market Still Undervaluing This Learning-Tech Stock’s Growth Story?
Youdao (NYSE:DAO) has quietly turned in steady gains this year, and that kind of under the radar move often signals investors are starting to reassess the company’s long term learning-tech story.
See our latest analysis for Youdao.
At around $9.02 per share, Youdao’s year to date share price return of 26.51% and three year total shareholder return of 73.46% suggest investors are gradually warming to its improving growth profile, even if near term share price momentum has been choppy.
If Youdao’s quiet re rating has caught your eye, this could be a good moment to see what else is setting up for growth across tech and education focused names via high growth tech and AI stocks.
With shares still trading at a near 39 percent discount to analyst targets despite double digit revenue and surging profit growth, the key question now is whether Youdao remains mispriced or whether markets are already baking in the next leg of expansion.
Most Popular Narrative Narrative: 30.9% Undervalued
With Youdao last closing at $9.02 against a narrative fair value near $13, the implied upside rests on ambitious, but specific, growth assumptions.
Analysts expect earnings to reach CN¥388.3 million (and earnings per share of CN¥3.49) by about September 2028, up from CN¥228.2 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting CN¥553.8 million in earnings, and the most bearish expecting CN¥234 million.
Want to see what kind of revenue curve, margin lift, and valuation multiple are baked into that gap? The full narrative unpacks the entire math behind this upside case.
Result: Fair Value of $13.04 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, sustained margin compression and weaker smart device demand could quickly derail the growth narrative and force investors to reassess Youdao’s premium assumptions.
Find out about the key risks to this Youdao narrative.
Another View: Rich Multiples Signal Caution
That 30.9 percent undervaluation story bumps into a tougher reality when you look at earnings. Youdao trades on about 53.5 times earnings, versus a fair ratio near 37.1 times and just 16.8 times for the US Consumer Services industry. Is this premium a cushion or a cliff?
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own Youdao Narrative
If you see the story differently or want to dig into the numbers yourself, you can build a custom narrative in just minutes: Do it your way.
A great starting point for your Youdao research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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