TAL Education Earnings: Raising Fair Value Estimate by 13% on Strong Growth Momentum

TAL Education’s third-quarter fiscal 2025 (ending February) results exceeded our expectations. Revenue increased by 62% year on year, accelerating from the 50% growth observed in the first half. The adjusted operating margin improved by 2.4 percentage points to negative 0.3%, surpassing our projection of negative 0.8%. Given the strong growth momentum, we have raised our revenue and margin forecasts, resulting in a 39% increase in our fiscal 2025 earnings estimate to USD 67 million and a 35%-68% increase for fiscal 2026-29. Consequently, we raise our fair value estimate by 13% to USD 11.50 per share. We believe the shares are fairly valued after the 28% gain following its results announcement.