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TAL Education Group (TAL)
NYSE:TAL
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TAL Education Group
(NYSE:TAL)
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Rating:64Neutral
Price Target:
$11.50
▲(6.88% Upside)
The score is driven primarily by improving fundamentals (better revenue growth and profitability with a strong, low-leverage balance sheet) and a constructive earnings update highlighting margin expansion, positive operating income, and buyback support. These positives are tempered by weakening free-cash-flow growth, a technically weak setup (below key moving averages with negative MACD), and a relatively high P/E with no dividend yield support.
Positive Factors
Revenue Growth Trajectory
Sustained double‑digit revenue growth demonstrates recovering demand and expanding adoption of TAL’s mix of online and offline K‑12 offerings. Durable top‑line momentum supports scale advantages across content, AI features and channels, underpinning multi‑quarter revenue visibility.
Margin Expansion & Profitability
A meaningful margin uptick and operating profitability turnaround reflect improved unit economics and tighter expense control (S&M and G&A as a percent of revenue declined). These structural efficiency gains increase operating leverage as revenue scales, improving sustainable earnings power.
Strong Liquidity & Low Leverage
Robust cash balances, sizable operating cash generation and conservative debt (debt/equity 0.11) give management flexibility to invest, fund device R&D, buy back shares, and withstand cyclical demand. A large deferred‑revenue base also provides near‑term cash visibility.
Negative Factors
Investment‑stage Device Losses
The learning‑device business remains loss‑making and capital intensive, requiring ongoing resource allocation. Its uncertain breakeven timeline and continued adjusted operating losses can erode consolidated margins and cash generation until scale or pricing power is achieved.
Weaker Free Cash Flow Momentum
An 11.5% decline in FCF growth and a low operating cash to net income ratio (0.26) indicate weaker cash conversion. Slower FCF momentum reduces financial flexibility to fund investments or absorb device losses without relying on reserves, pressuring medium‑term capital allocation.
Competition & Margin Volatility
Intense competition in content, hardware and AI drives pricing/ASP pressure and forces sustained marketing and investment spending. Management’s caution about timing‑driven marketing cuts implies margins could fluctuate materially, limiting predictability of sustained profitability.
TAL Education Group (TAL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.48B
Dividend YieldN/A
Average Volume (3M)2.81M
Price to Earnings (P/E)36.9
Beta (1Y)0.59
Revenue Growth44.37%
EPS Growth146.96%
CountryUS
Employees15,000
SectorConsumer Defensive
Sector Strength42
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.25
Shares Outstanding460,861,500
10 Day Avg. Volume3,348,360
30 Day Avg. Volume2,813,075
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)0.23
Price to Sales (P/S)0.39
P/FCF Ratio3.06
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue2.49
Enterprise Value/Gross Profit4.57
Enterprise Value/Ebitda38.26
Forecast
1Y Price Target
$11.54Price Target Upside7.25% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
TAL Education Group Business Overview & Revenue Model
Company DescriptionTAL 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 provides tutoring services primarily through small-class services under the Xueersi, Xueersi Online School, First Leap, Tipaipai, Xiaohou AI, Xiaohoucode, Aiqidao, Mamabang, Kaoyanbang, and Shunshunliuxue brand names; and personalized premium services under Izhikang name. The company also operates jzb.com, an online education platform; provides investment management and consulting services; develops and sells software and networks, as well as related consulting services; and sells educational materials and products. TAL Education Group was founded in 2003 and is headquartered in Beijing, the People's Republic of China.
How the Company Makes MoneyTAL Education Group generates revenue primarily through its tutoring services, which include both in-person and online classes. The company charges tuition fees for these courses, which vary based on factors such as the subject matter, class size, and duration. A significant portion of TAL's income comes from its online education platforms, which have gained popularity due to their flexibility and accessibility. Additionally, TAL develops and sells educational content and learning materials, further contributing to its revenue. The company has established partnerships with various educational institutions and technology providers, enhancing its service offerings and expanding its reach in the competitive education market. Factors such as the growing demand for quality education in China and a focus on technological innovation have also played a critical role in driving TAL's earnings.
TAL Education Group Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q3-2026)
| Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call highlights a clear operational and financial improvement: strong revenue growth (+27% YoY), substantial gross profit expansion (+35% YoY) and a pronounced profitability turnaround (operating income positive vs loss a year ago), supported by robust cash generation and user engagement metrics. Offsetting this are ongoing investments and an adjusted operating loss in the learning device business, decelerating device growth and ASP pressure, and competitive and seasonal risks that could cause near-term variability. Overall, the positives around top-line growth, margin expansion, cash strength and product engagement substantially outweigh the challenges tied to the investment-stage device business and short-term uncertainty.Q3-2026 Updates
Positive Updates
Strong Revenue Growth
Net revenues of $770.2M (RMB5,480.4M) in 3Q FY2026, up 27% YoY in USD and 26.8% YoY in RMB.
Profitability Turnaround
Income from operations of $93.1M versus an operating loss of $17.4M a year ago; non-GAAP income from operations of $104.0M (vs. non-GAAP loss $1.9M LY). Net income attributable to TAL $130.6M (vs. $23.1M LY); non-GAAP net income $141.4M (vs. $38.6M LY).
Strong Gross Profit and Margin Expansion
Gross profit rose 35% YoY to $431.8M from $319.8M; gross margin improved to 56.1% from 52.7% (increase of 3.4 percentage points).
Improved Operating Efficiency and Expense Discipline
Selling & marketing expenses decreased 2.8% YoY to $220.1M; non-GAAP S&M decreased 2.1% to $217.6M and fell from 36.7% to 28.3% of revenue (down 8.4 pp). Non-GAAP G&A as % of revenue decreased from 16.6% to 14.4% (down 2.2 pp). Total share-based compensation declined 30.2% to $10.8M.
Healthy Cash Generation and Strong Balance Sheet
Cash & cash equivalents of $2,146.3M, short-term investments $1,471.1M, deferred revenue $1,162.8M, and net cash provided by operating activities of $526.7M in the quarter. Board authorized up to $500M share repurchase program; ~$27.7M deployed to repurchase 844,856 shares to date.
User Engagement and Product Milestones
Learning devices showed YoY revenue and volume growth; average weekly active rate ~80% and average daily usage ~1 hour per active device. AI assistant Xiao Si activated 1,000,000,000 times (as of Dec 2025); AI Thinky facilitated hundreds of thousands of guided-learning hours. Launched X5 Classic; showcased AI Buddy at CES (received CES Picks recognition).
Negative Updates
Learning Device Business Still Loss-Making and in Investment Phase
Learning device segment reported an adjusted operating loss as it remains in an investment phase; management stated breakeven timeline is uncertain and will require continued resource allocation.
Deceleration in Learning Device Growth Weighing on Top-line Momentum
Moderation in group revenue growth versus prior quarter primarily driven by a deceleration in learning device growth; blended ASP for devices remained below RMB4,000, reflecting a shift in product mix and downward ASP pressure versus prior periods.
Highly Competitive Market Dynamics
Leadership highlighted a highly competitive environment for learning devices (content, hardware, AI) that demands continued investment and may limit near-term visibility and margin stability.
Seasonality and Limited Short-Term Visibility
Management warned of potential short-term variability due to seasonal demand shifts, product launch timing differences, competitive pressures, and deliberate resource reallocation; expects year-over-year growth to moderate in the second half due to a higher comparison base.
Margin Volatility Linked to Marketing Spend Fluctuations
Quarterly margin improvement was partly driven by lower marketing and brand expenses; management cautioned this decline in spend may be timing-related and that margin levels could fluctuate going forward.
Company Guidance
Management guided that improving overall profitability is a priority while acknowledging limited short‑term visibility and potential variability, expecting year‑over‑year revenue growth to moderate in H2 FY2026 (due to a higher comparable base) and continued fluctuation in learning device revenue as that business remains in an investment phase (blended ASP < RMB4,000, adjusted operating loss). They will flexibly allocate resources, use agile channel management for new businesses, and prudently expand the Peiyou learning center network; Q3 metrics cited include net revenues of $770.2M (RMB5,480.4M, +27% YoY), non‑GAAP income from operations $104.0M, non‑GAAP net income attributable to TAL $141.4M, income from operations $93.1M (vs loss last year), gross profit $431.8M (+35% YoY) and gross margin 56.1% (vs 52.7%). Operational and engagement metrics highlighted: learning devices saw year‑over‑year volume growth, ~80% average weekly active rate, ~1 hour average daily use per active device, AI Thinky delivered hundreds of thousands of hours of guided learning, Xiao Si activated 1,000,000,000 times (as of Dec 2025). Expense and balance‑sheet metrics referenced: cost of revenues $338.4M (+18%), selling & marketing $220.1M (non‑GAAP S&M 28.3% of revenues, down from 36.7%), non‑GAAP G&A $110.7M (14.4% of revenues, down from 16.6%), share‑based comp $10.8M (−30.2%), cash & equivalents $2.1463B, short‑term investments $1.4711B, restricted cash $339.3M, deferred revenue $1.1628B, net cash provided by operations $526.7M, and a board‑authorized share repurchase program up to ~$500M (≈$27.7M spent to buy 844,856 shares to date).TAL Education Group Financial Statement Overview
Summary
Income statement trends are improving (revenue growth 10.03% TTM, gross margin 54.42%, net margin 6.45%), and leverage is conservative (debt-to-equity 0.11, equity ratio 63.03%). The main offset is weaker cash-flow momentum, with free cash flow down 11.53% TTM and relatively low operating cash flow to net income (0.26).Income Statement
TAL Education Group has shown a strong recovery in its income statement metrics. The TTM data indicates a significant revenue growth rate of 10.03%, with a healthy gross profit margin of 54.42%. The net profit margin has improved to 6.45%, indicating enhanced profitability. However, the EBIT and EBITDA margins are relatively modest at 5.01% and 6.51%, respectively, suggesting room for operational efficiency improvements.75
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a low debt-to-equity ratio of 0.11, indicating conservative leverage. The return on equity (ROE) has improved to 4.71%, showing better utilization of equity. The equity ratio stands at 63.03%, highlighting a strong equity base. However, the company should continue to focus on improving its ROE to enhance shareholder value.70
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth by 11.53% in the TTM period, which is a concern. However, the operating cash flow to net income ratio is 0.26, and the free cash flow to net income ratio is 1.0, indicating that the company is generating sufficient cash relative to its net income. Continued focus on cash flow management will be crucial for sustaining operations and growth.65
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.65B | 2.25B | 1.49B | 1.02B | 4.39B | 4.50B |
| Gross Profit | 1.44B | 1.20B | 806.12M | 583.41M | 2.19B | 2.45B |
| EBITDA | 172.72M | 184.41M | -39.36M | -73.27M | -580.40M | -46.69M |
| Net Income | 171.21M | 84.59M | -3.57M | -135.61M | -1.14B | -115.99M |
Balance Sheet | ||||||
| Total Assets | 5.45B | 5.50B | 4.93B | 4.72B | 5.08B | 12.11B |
| Cash, Cash Equivalents and Short-Term Investments | 3.25B | 3.62B | 3.30B | 3.17B | 2.71B | 5.94B |
| Total Debt | 373.33M | 333.35M | 239.22M | 157.72M | 242.09M | 4.15B |
| Total Liabilities | 2.02B | 1.74B | 1.29B | 903.44M | 1.08B | 6.91B |
| Stockholders Equity | 3.44B | 3.77B | 3.66B | 3.84B | 4.03B | 5.20B |
Cash Flow | ||||||
| Free Cash Flow | 441.40M | 285.66M | 184.88M | -102.97M | -1.19B | 708.99M |
| Operating Cash Flow | 441.40M | 397.92M | 306.17M | 7.36M | -939.18M | 954.73M |
| Investing Cash Flow | -492.70M | -847.03M | 95.07M | -301.63M | 1.37B | -2.64B |
| Financing Cash Flow | -542.36M | -13.17M | -233.09M | -66.18M | -2.77B | 4.79B |
TAL Education Group Technical Analysis
Negative
10.76
Price Trends
11.14
Negative
11.26
Negative
10.83
Negative
Market Momentum
-0.11
Positive
43.99
Neutral
7.90
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TAL, the sentiment is Negative. The current price of 10.76 is below the 20-day moving average (MA) of 11.20, below the 50-day MA of 11.14, and below the 200-day MA of 10.83, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 43.99 is Neutral, neither overbought nor oversold. The STOCH value of 7.90 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TAL.
TAL Education Group Risk Analysis
TAL Education Group disclosed 85 risk factors in its most recent earnings report. TAL Education Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TAL Education Group Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.19B | 17.40 | 17.38% | ― | 12.24% | 52.97% | |
78 Outperform | $9.19B | 24.49 | 10.05% | 1.03% | 7.22% | -2.84% | |
76 Outperform | $3.18B | 12.59 | 23.04% | ― | 17.25% | 30.15% | |
74 Outperform | $4.87B | 23.60 | 27.77% | ― | 7.05% | -2.63% | |
73 Outperform | $5.04B | 25.01 | 20.15% | ― | 2.01% | -13.82% | |
64 Neutral | $6.48B | 36.87 | 4.77% | ― | 44.37% | 146.96% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% |
* Consumer Defensive Sector Average
TAL
TAL Education Group
10.76
-1.79
-14.26%
ATGE
Adtalem Global Education
115.92
13.50
13.18%
LOPE
Grand Canyon Education
174.93
0.49
0.28%
LRN
Stride
82.75
-51.38
-38.31%
EDU
New Oriental Education Tech
58.95
10.03
20.49%
LAUR
Laureate Education
34.17
15.11
79.28%
TAL Education Group Corporate Events
TAL Education Group Reports Strong Q2 2026 Financial Results
Oct 30, 2025
On October 30, 2025, TAL Education Group announced its unaudited financial results for the second quarter of fiscal year 2026, which ended on August 31, 2025. The company reported a significant increase in net revenues, reaching $861.4 million, a 39.1% rise compared to the same period last year. Income from operations also saw a substantial growth, with a 101.8% increase to $96.1 million. The results reflect the company’s strategic focus on enhancing user experience and educational model innovations, contributing to revenue growth across its core businesses. TAL’s ongoing investments in technology and educational content are expected to sustain this momentum, positioning the company for continued success in the smart learning industry.
The most recent analyst rating on (TAL) stock is a Buy with a $16.00 price target. To see the full list of analyst forecasts on TAL Education Group stock, see the TAL Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.