TAL Education Surges on Strong Earnings, Buyback Plan; Is the Turnaround Sustainable?
NEW YORK—TAL Education Group (NYSE: TAL), a leading player in China's education technology sector, has jolted the market with a powerful one-two punch: better-than-expected quarterly earnings and a fresh commitment to return capital to shareholders. The news propelled its stock price sharply higher, reigniting debate about the company's valuation and long-term trajectory after years of upheaval.
The company reported fiscal third-quarter 2026 revenue of $2.82 billion and net income of $278.7 million, showcasing improved profitability. More notably, its board authorized a new share repurchase program, extending a strategy to bolster shareholder value. The market's response was immediate and forceful, with shares closing at $12.70 after a single-day surge of over 18%.
This rally represents a stark contrast to the company's longer-term performance, which includes a steep 84% decline in total shareholder return over the past five years—a period heavily marked by China's sweeping regulatory crackdown on for-profit tutoring. The recent 77.87% three-year return, however, suggests a nascent recovery is gaining steam.
"The numbers are finally telling a coherent story of adaptation," said Michael Chen, a portfolio manager at Horizon Capital in Singapore. "The digital pivot is bearing fruit, margins are improving, and the buyback signals management's confidence. At a current price around $12.70, it still trades below our estimated fair value of $14.46, presenting a compelling opportunity."
Yet, not all observers are convinced. Lisa Wang, an independent analyst based in Shanghai, offered a more critical take: "This is a classic dead-cat bounce fueled by short-term optics. Let's not forget the core K-12 tutoring business ('Peiyou') is still shrinking under regulatory weight. They're burning cash on gadgets and marketing to chase growth. That P/E of 27.7 is wildly optimistic for a company in structural transition. The moment revenue growth stutters, this house of cards tumbles."
The valuation debate hinges on several factors. Bullish narratives focus on TAL's successful expansion into digital learning services and content, which command higher margins. The buyback program is seen as a prudent use of cash in a still-uncertain market. Conversely, bears point to the elevated price-to-earnings ratio, which sits above both the industry and peer averages, questioning its sustainability.
David Miller, a retail investor following the education sector, shared a pragmatic view: "I've held through the worst of it. The buyback is a good faith gesture, and the earnings beat is a relief. But I'm watching the 'learning devices' segment closely—if that doesn't turn profitable soon, it will drag everything down. I'm cautiously optimistic but not ready to double down."
As TAL Education navigates its post-regulatory identity, the coming quarters will be crucial in determining whether this week's surge is the start of a durable comeback or merely a fleeting moment of market enthusiasm.
This analysis is based on publicly available data and analyst commentary. It is for informational purposes only and does not constitute financial advice.