TAL · TAL Education Group
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $11.06
Note written ·
Price against the kill line
7.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $11.06, on record since 11 November 2026. The shares are down 12.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $11.06, the 200-day average of closes on 11 November 2026, which would show the shares leading the S&P 500 again. Third-quarter fiscal 2027 revenue growth above the 31.9% of the May quarter would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Staples
Filed figures are not available: no quarterly report in US GAAP with the SEC (a foreign filer reports on Form 20-F or 40-F).
All filed numbers
What TAL Education Group reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): the share of shares outstanding is not available, 6.9 days of average trading to cover, +3.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $1.2M |
The thesis
TAL Education Group's shares are more likely to lag the S&P 500 over the next three months. Revenue growth slowed to 15.5% in the quarter ended 31 August 2026 from 31.9% in the May quarter, and sales missed the $1.082 billion estimate (Benzinga, 29 October 2026). The third-quarter fiscal 2027 report decides whether growth steadies.
The business behind the pivot from banned K-12 tutoring to enrichment and learning devices is still profitable at the operating line. Net revenues were US$994.6 million against US$861.4 million a year earlier, according to TAL's 29 October 2026 Form 6-K. GAAP income from operations rose to US$235.9 million from US$96.1 million, and gross margin reached 59.8% versus 57.0%. The release gave no quantitative guidance for the third quarter or the fiscal year.
The shares closed at $10.07 on 11 November 2026. That is 23.9% below the 52-week intraday high of $13.23 set on 30 January 2026, and the price already reflects the revenue miss and the missing outlook. The three-month price change is −13.2%.
Bullish and bearish views on TAL Education Group
The bull case on TAL Education Group (TAL), in brief: marketing spend keeps falling. The bear case: revenue missed and growth halved.
Bull case
- Marketing spend keeps falling. GAAP selling and marketing expense fell 15.3% to US$226.4 million, and the non-GAAP figure fell 15.6% to US$223.3 million (TAL Form 6-K, 29 October 2026). Revenue still grew 15.5% over the same period.
- Operating profit more than doubled. GAAP income from operations was US$235.9 million versus US$96.1 million, and non-GAAP was US$247.7 million versus US$107.8 million (TAL, 29 October 2026). Operating costs and expenses fell 0.8% to US$758.8 million.
- Gross margin widened. Gross margin was 59.8% against 57.0% a year earlier, and gross profit rose 21.1% (TAL, 29 October 2026). It had been 57.8% in the May quarter.
- The balance sheet is large. Cash, cash equivalents and short-term investments totalled US$2,748.5 million on 31 August 2026 (TAL, 29 October 2026).
- Insider activity was routine. SEC Form 4 filings show an executive exercised options on 429,630 shares at $0.01 on 9 November 2026, with 193,567 shares withheld for tax at $10.16. Director Zhang Kaifu's 26 October 2026 option exercise also carried tax withholding (filed 28 October 2026).
Bear case
- Revenue missed and growth halved. Sales of $994.648 million missed a $1.082 billion estimate, and growth slowed to 15.5% from 31.9% (Benzinga and TAL, 29 October 2026).
- Reported earnings turned negative. Net loss attributable to TAL was US$47.4 million versus net income of US$124.1 million a year earlier, and non-GAAP loss per American depositary share (ADS) was $0.06 against a $0.23 estimate (TAL and Benzinga, 29 October 2026).
- Investment swings dominate net income. Other expense was US$189.7 million versus other income of US$67.1 million a year earlier, which TAL attributed to fair-value changes in certain investments. In the May quarter, other income of US$405.2 million had inflated net income.
- Deferred revenue fell from May. It was US$930.4 million on 31 August 2026 versus US$1,219.0 million on 31 May 2026, though above the US$882.2 million of 28 February 2026 (TAL releases, 30 July 2026 and 29 October 2026). Seasonal timing of tuition receipts affects the sequential comparison.
- No guidance. The release contained no quantitative outlook for the third quarter or the fiscal year, so the next quarter has no company anchor.
- Regulatory history. Chinese authorities banned for-profit academic tutoring in July 2021, and a new rule on enrichment or learning-device content would hit the pivot directly.
Price setup
The shares closed at $10.07 on 11 November 2026, after closes of $10.08 on 10 November 2026, $10.19 on 9 November 2026, $10.16 on 6 November 2026, $10.19 on 5 November 2026 and $9.91 on 4 November 2026. The price has held in a narrow band of about 30 cents since 5 November 2026.
The 50-day average of adjusted closes is $11.46, and the 200-day average of closes sits above the last close as well, so the shares trade under both. The close of $11.60 on 13 August 2026 is the reference for the −13.2% three-month change.
The 52-week closing low is $8.95, set on 25 June 2026, which is 11.1% under the last close. The 52-week intraday high is $13.23 from 30 January 2026.
Catalysts ahead
- ~28 January 2027 (est.): Third-quarter fiscal 2027 results, covering the quarter ending 30 November 2026 (date not yet announced). Shows whether revenue growth steadies after slowing to 15.5% in the August quarter and whether the company gives a quantitative outlook.
What would change the view
A daily close above $11.06, the 200-day average of closes on 11 November 2026, which would show the shares leading the S&P 500 again. Third-quarter fiscal 2027 revenue growth above the 31.9% of the May quarter would also show the shares leading.
What it trades with
TAL trades with other US-listed China-based education and consumer shares, which react to Chinese regulatory headlines and to audit-inspection and delisting rules for China-based issuers. Its reported dollar results also move with the renminbi, since the operations earn renminbi. The investment portfolio behind the large other income and expense lines adds a source of earnings swings unrelated to tutoring demand.
The evidence, claim by claim (8)
- Net revenues for the quarter ended 31 August 2026 were US$994.6 million, up 15.5% from US$861.4 million; the first fiscal quarter had grown 31.9%. TAL Form 6-K, second-quarter fiscal 2027 results · as of
- Gross margin was 59.8% versus 57.0% a year earlier; GAAP income from operations was US$235.9 million versus US$96.1 million. TAL Form 6-K, second-quarter fiscal 2027 results · as of
- GAAP selling and marketing expense fell 15.3% to US$226.4 million; the non-GAAP figure fell 15.6% to US$223.3 million. TAL Form 6-K, second-quarter fiscal 2027 results · as of
- Other expense was US$189.7 million versus other income of US$67.1 million a year earlier, which TAL attributed to fair-value changes in certain investments; net loss attributable to TAL was US$47.4 million versus net income of US$124.1 million. TAL Form 6-K, second-quarter fiscal 2027 results · as of
- Non-GAAP loss per ADS was $0.06 against a $0.23 estimate; sales of $994.648 million missed a $1.082 billion estimate. Benzinga · as of
- Deferred revenue was US$930.4 million on 31 August 2026 versus US$1,219.0 million on 31 May 2026 and US$882.2 million on 28 February 2026. TAL Form 6-K, second-quarter and first-quarter fiscal 2027 results · as of
- Cash, cash equivalents and short-term investments totalled US$2,748.5 million on 31 August 2026; the release gave no quantitative guidance for the third quarter or the fiscal year. TAL Form 6-K, second-quarter fiscal 2027 results · as of
- An executive (Peng Alex Zhuangzhuang) exercised options on 429,630 shares at $0.01 and had 193,567 shares withheld for tax at $10.16 on 9 November 2026. SEC Form 4, filed 12 November 2026 · as of