Long-established in the Education industry, TAL Education Group (TAL, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 5.21%, juxtaposed with a three-month change of 30.8%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of TAL Education Group.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 5/10
- Growth rank: 1/10
- GF Value rank: 1/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned TAL Education Group the GF Score of 52 out of 100, which signals poor future outperformance potential.
Snapshot of TAL Education Group's Business
TAL Education Group, with a market cap of $4.96 billion, is a smart learning solutions provider in China. The company, which reported sales of $1.07 billion, has shifted its focus towards enrichment learning, content solutions, and learning technology solutions following regulatory changes in 2021. However, its operating margin of -11.22% raises concerns about its profitability.
Profitability Concerns
TAL Education Group's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-173.02%)), as shown by the following data: 2019: 13.33; 2020: 5.09; 2021: -7.36; 2022: -2.49; 2023: -8.90; .
Growth Prospects
A lack of significant growth is another area where TAL Education Group seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -33.8 per year over the past three years, which underperforms worse than 91.85% of 233 companies in the Education industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given TAL Education Group's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. The company's low profitability and growth ranks, coupled with its declining operating margin and revenue, signal a challenging road ahead. As investors, it's crucial to consider these factors when evaluating TAL Education Group's future prospects.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
