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Earnings Miss: TAL Education Group Missed EPS And Analysts Are Revising Their Forecasts

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Simply Wall St
·4 min read
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It's been a pretty great week for TAL Education Group (NYSE:TAL) shareholders, with its shares surging 16% to US$76.00 in the week since its latest quarterly results. Revenues of US$1.1b beat expectations by 3.5%. Unfortunately statutory earnings per share (EPS) fell well short of the mark, turning in a loss of US$0.07 compared to previous analyst expectations of a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for TAL Education Group

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for TAL Education Group from 27 analysts is for revenues of US$6.18b in 2022 which, if met, would be a sizeable 55% increase on its sales over the past 12 months. Earnings are expected to improve, with TAL Education Group forecast to report a statutory profit of US$0.69 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.24b and earnings per share (EPS) of US$0.78 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.0% to US$86.89, suggesting that these impacts are not expected to weigh on the stock's value in the long term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on TAL Education Group, with the most bullish analyst valuing it at US$108 and the most bearish at US$70.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await TAL Education Group shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting TAL Education Group's growth to accelerate, with the forecast 55% growth ranking favourably alongside historical growth of 35% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 24% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect TAL Education Group to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TAL Education Group. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for TAL Education Group going out to 2023, and you can see them free on our platform here..

You can also see our analysis of TAL Education Group's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.