Yahoo Finance TAL Education Group (NYSE:TAL) investors are sitting on a loss of 85% if they invested three years ago
While it may not be enough for some shareholders, we think it is good to see the TAL Education Group (NYSE:TAL) share price up 24% in a single quarter. But the last three years have seen a terrible decline. In that time the share price has melted like a snowball in the desert, down 85%. So we're relieved for long term holders to see a bit of uplift. But the more important question is whether the underlying business can justify a higher price still. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for TAL Education Group
Because TAL Education Group made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over three years, TAL Education Group grew revenue at 16% per year. That's a pretty good rate of top-line growth. So it's hard to believe the share price decline of 23% per year is due to the revenue. More likely, the market was spooked by the cost of that revenue. If you buy into companies that lose money then you always risk losing money yourself. Just don't lose the lesson.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
TAL Education Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for TAL Education Group in this interactive graph of future profit estimates.
A Different Perspective
While the broader market lost about 12% in the twelve months, TAL Education Group shareholders did even worse, losing 20%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. However, the loss over the last year isn't as bad as the 13% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with TAL Education Group .
Of course TAL Education Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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