TAL Education Q2 Earnings: Is NYSE:TAL Expensive at 96.1x Forward P/E?

in EARNINGS/INVESTING IDEAS by

TAL Education Group (NYSE:TAL) is scheduled to report Q2 earnings results before markets open for trading on October 22, 2020.

The company is expected to report earnings of $0.11/share on revenue of $1.127 billion. The consensus earnings per share (EPS) of $0.11/share is based on a poll of 8 analysts and represents a growth in eps of 468.1% over the same quarter last year, when the company reported earnings of $0.02/share.

The revenue forecast of $1.127 billion based on a poll of 14 analysts implies a year-over-year (YoY) growth in revenue of 20.3%. Last year the company reported $936.6 million in revenue for the quarter.

Expected to report EPS growth of 468.1% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $1,127.15 $936.63 20.3%
EPS $0.11 $0.02 468.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from TAL Education Group for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 $0.07 $0.18 156.4% Beat
Q4, 2020 $0.08 -$0.10 −229.2% Missed
Q3, 2020 $0.17 $0.09 −47.5% Missed
Q2, 2020 $0.15 $0.02 −86.4% Missed
Q1, 2020 $0.15 $0.03 −79.7% Missed
Q4, 2019 $0.15 $0.20 32.0% Beat
Q3, 2019 $0.10 $0.24 130.5% Beat
Q2, 2019 $0.14 $0.16 16.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending May 31, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $78.47 $78.17 −0.4% Decline
April 28, 2020 $51.40 $55.26 7.5% Increase
January 21, 2020 $54.02 $49.40 −8.6% Decline
October 24, 2019 $37.79 $43.10 14.1% Increase

Fundamentals And Technical Analysis

TAL Education Group is currently trading at $78.32/share, down −1.8% for the day. The company is trading at approximately 93.6% of its 52-week high of $83.67/share. The company’s stock price is up 0.2% since the last earnings report and down −1.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 53.52 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:TAL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −3,795.45 and a forward P/E multiple of 96.14.

TAL Education Group’s current share price also implies a price-to-book (P/B) multiple of 18.15. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date May 31, 2020
Stock Price (Current) $78.32
P/E Ratio −3,795.5x
P/E Ratio (Fwd) 96.1x
PEG Ratio 37.0
Total Debt / Total Capital 3.2%
Levered Free Cash Flow $890.4 million
EV / EBITDA 163.8x

Finbox

TAL Education Group is a large-cap stock with a market capitalization of $47.018 billion and a total enterprise value of $45.742 billion. The company operates in the Consumer Discretionary sector and the Diversified Consumer Services industry.

TAL Education Group provides K-12 after-school tutoring services in the People’s Republic of China. The company offers tutoring services to K-12 students covering various academic subjects, including mathematics, physics, chemistry, biology, history, geography, political science, English, and Chinese. It also provides tutoring services primarily through small classes under the Xueersi, Mobby, and Firstleap brand names; personalized premium services under Izhikang name. In addition, the company operates jzb.com, an online education platform that serves as a gateway for online courses offered through xueersi.com; and other Websites for specific topics and offerings, such as college entrance examinations, high school entrance examinations, graduate school entrance examinations, preschool education, and raising infants and toddlers, as well as mathematics, English, and Chinese composition. Further, it operates mmbang.com and the Mama Bang app, an online platform focusing on children, baby, and maternity market; and provides consulting services for overseas studies under the Shunshun Liuxue name, as well as tutoring services for students aged two through twelve under the Mobby brand. Additionally, the company offers education and management consulting, investment management and consulting services; develops and sells software and networks, as well as related consulting services; and sells educational materials. As of February 29, 2020, its educational network included 871 learning centers and 767 service centers in 69 cities throughout China and one city in the United States. The company was founded in 2003 and is headquartered in Beijing, the People’s Republic of China.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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