TAL Education Group (NYSE: TAL)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001499620
Market Cap 6.18 Bn
P/B 1.77
P/E 22.22
P/S 2.20
ROIC (Qtr) 4.37
Div Yield % 0.00
Rev 1y % (Qtr) 27.00
Total Debt (Qtr) 377.35 Mn
Debt/Equity (Qtr) 0.11
Add ratio to table...

About

TAL Education Group, known as TAL, is a leading smart learning solutions provider based in China. Its ticker symbol is TAL. The company operates in the education industry and offers a range of services and products designed to provide comprehensive learning experiences for learners. TAL's main business activities involve providing comprehensive tutoring services to K-12 students, as well as offering learning products, content, technologies, and services to learners and customers. The company's primary products and services include small classes,...

Read more

Investment thesis

Bull case

  • Strong operating cash flow of 590.10M provides robust 1.56x coverage of total debt 377.35M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.45B provide 23.50x coverage of short-term debt 104.32M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 590.10M provides exceptional 4758.87x coverage of minority interest expenses 124000, showing strong core operations.
  • Strong tangible asset base of 5.64B provides 14.95x coverage of total debt 377.35M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 479.16M exceeds capital expenditure of 110.94M by 4.32x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 590.10M barely covers its investment activities of (14.09M), with a coverage ratio of -41.88, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 590.10M provides insufficient coverage of deferred revenue obligations of 1.16B, which is 0.51x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 590.10M barely covers operating expenses of (4.84M) with a -122 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Tax assets of 1.47M provide limited offset against tax liabilities of 13.91M, which is 0.11x, indicating potential future cash flow pressure from tax obligations.
  • Short-term investments of 1.47B exceed receivables of 124000 by 11863.84x, indicating potentially inefficient capital allocation given collection cycle needs.

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.81 0.71
EV to Cash from Ops. EV/CFO 8.15 6.80
EV to Debt EV to Debt 12.74 11.15
EV to EBIT EV/EBIT 13.01 112.78
EV to EBITDA EV/EBITDA 107.02 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 10.04 5.57
EV to Market Cap EV to Market Cap 0.78 582,173.64
EV to Revenue EV/Rev 1.71 1.74
Price to Book Value [P/B] P/B 1.77 -3.80
Price to Earnings [P/E] P/E 22.22 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.69
Interest Coverage Int. cover (Qtr) 0.00 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.25 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.77 25.11
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 133.95 -39.04
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 146.81 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 146.81 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 153.89 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) -0.88 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 40.17 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.63
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.18 0.73
Current Ratio Curr Ratio (Qtr) 2.07 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.11 3.83
Interest Cover Ratio Int Coverage (Qtr) 0.00 53.05
Times Interest Earned Times Interest Earned (Qtr) 0.00 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) 13.12 -82.13
EBT Margin % EBT Margin % (Qtr) 13.12 -47.07
Gross Margin % Gross Margin % (Qtr) 55.20 50.48
Net Profit Margin % Net Margin % (Qtr) 9.90 -48.61