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TAL Education Group Stock Downgraded (XRS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- TAL Education Group (NYSE: XRS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 20.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • XRS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, TAL EDUCATION GROUP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • XRS has underperformed the S&P 500 Index, declining 18.60% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
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TAL Education Group, together with its subsidiaries, provides K-12 after-school tutoring services in China. The company has a P/E ratio of 17.1, below the S&P 500 P/E ratio of 17.7. TAL Education Group has a market cap of $730.6 million and is part of the services sector and diversified services industry. Shares are down 3.3% year to date as of the close of trading on Tuesday.

You can view the full TAL Education Group Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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