NEW YORK (TheStreet) -- TAL Education Group (XRS) was falling 10.88% to $20.96 on Monday afternoon despite the company's announcement of an investment in Babytree, which provides products and services both online and offline to help with pregnancy and early childhood in China.
The Chinese educational technology company announced that it had made an investment in Babytree worth approximately $23.5 million, but other details and terms were not disclosed. The maneuver will lead to a long-term collaborative project that begins with pregnancy and carries through early childhood into the 12th grade.
TheStreet Ratings team rates TAL Education as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TAL EDUCATION GROUP (XRS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, notable return on equity, expanding profit margins and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XRS's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 50.4%. 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. To add to this, XRS has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, TAL EDUCATION GROUP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for TAL EDUCATION GROUP is rather high; currently it is at 51.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.01% significantly outperformed against the industry average.
- Powered by its strong earnings growth of 114.28% and other important driving factors, this stock has surged by 173.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- You can view the full analysis from the report here: XRS Ratings Report