Youdao (NYSE:DAO) Shares Up 11% - Still a Buy?

Key Points

• Shares jumped 11% to $10.76 on Thursday, but the rally occurred on light volume (about 78% below the average), suggesting limited participation.
• Earnings beat but profitability is weak: Youdao reported Q earnings of $0.07 EPS vs. $0.04 expected and revenue of $223.6M vs. $211.5M, yet net margin was only 1.81% and return on equity was -6.41%, with a P/E around 82.5 and market cap of $1.28B.
• Analyst views are mixed: Citigroup upgraded the stock to Buy while Weiss Ratings reaffirmed a Sell, leaving MarketBeat's consensus at a Hold.

Youdao, Inc. Unsponsored ADR (NYSE:DAO - Get Free Report) shot up 11% during trading on Thursday . The stock traded as high as $10.70 and last traded at $10.7630. 20,654 shares traded hands during trading, a decline of 78% from the average session volume of 92,491 shares. The stock had previously closed at $9.70.

Wall Street Analysts Forecast Growth

Several brokerages recently commented on DAO. Weiss Ratings reissued a "sell (d+)" rating on shares of Youdao in a research report on Monday, December 22nd. Citigroup raised Youdao from a "hold" rating to a "buy" rating in a research report on Thursday, February 12th. One equities research analyst has rated the stock with a Buy rating and one has assigned a Sell rating to the company's stock. According to MarketBeat.com, the company has a consensus rating of "Hold".

Youdao Price Performance

The company has a market capitalization of $1.28 billion, a price-to-earnings ratio of 82.51 and a beta of 0.48. The stock has a 50-day moving average price of $9.93 and a 200-day moving average price of $10.18.

Youdao (NYSE:DAO - Get Free Report) last posted its earnings results on Thursday, February 12th. The company reported $0.07 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.04 by $0.03. The company had revenue of $223.64 million during the quarter, compared to analysts' expectations of $211.46 million. Youdao had a net margin of 1.81% and a negative return on equity of 6.41%.

Institutional Trading of Youdao

An institutional investor recently raised its position in Youdao stock. Public Employees Retirement System of Ohio lifted its stake in shares of Youdao, Inc. Unsponsored ADR (NYSE:DAO - Free Report) by 35.9% in the third quarter, according to the company in its most recent filing with the SEC. The fund owned 29,286 shares of the company's stock after buying an additional 7,729 shares during the quarter. Public Employees Retirement System of Ohio's holdings in Youdao were worth $291,000 as of its most recent SEC filing. 21.91% of the stock is currently owned by institutional investors.

Youdao Company Profile

Youdao, Inc NYSE: DAO, established in 2006 as a subsidiary of NetEase, is headquartered in Beijing, China. The company went public on the New York Stock Exchange in October 2019, marking a significant milestone in its development as an intelligent learning and knowledge service provider. Since its inception, Youdao has combined cloud computing, artificial intelligence and big data analytics to create an adaptive learning ecosystem designed to meet the needs of individual learners and organizations.

At the core of Youdao's offerings is its suite of digital dictionaries and translation tools, including the flagship Youdao Dictionary app and translation engine.

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