NEW YORK ( TheStreet) -- TAL Education Group (NYSE: XRS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and unimpressive growth in net income.
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- Looking at the price performance of XRS's shares over the past 12 months, there is not much good news to report: the stock is down 30.65%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, XRS is still more expensive than most of the other companies in its industry.
- The change in net income from the same quarter one year ago has exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income has decreased by 10.2% when compared to the same quarter one year ago, dropping from $8.45 million to $7.58 million.
- 45.40% is the gross profit margin for TAL EDUCATION GROUP which we consider to be strong. Regardless of XRS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, XRS's net profit margin of 14.50% compares favorably to the industry average.
- In comparison to the other companies in the Diversified Consumer Services industry and the overall market, TAL EDUCATION GROUP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- TAL EDUCATION GROUP's earnings per share declined by 9.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TAL EDUCATION GROUP increased its bottom line by earning $0.32 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.32).
-- Written by a member of TheStreet Ratings Staff