Intrinsic value of TAL Education Group ADR - TAL

Previous Close

$40.27

  Intrinsic Value

$48.54

stock screener

  Rating & Target

buy

+21%

Previous close

$40.27

 
Intrinsic value

$48.54

 
Up/down potential

+21%

 
Rating

buy

Our model is not good at valuating stocks of financial companies, such as TAL.

We calculate the intrinsic value of TAL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  68.23
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,043
  1,669
  2,578
  3,856
  5,595
  7,893
  10,851
  14,566
  19,126
  24,610
  31,085
  38,600
  47,192
  56,882
  67,679
  79,578
  92,569
  106,631
  121,744
  137,881
  155,019
  173,136
  192,212
  212,233
  233,190
  255,080
  277,906
  301,677
  326,409
  352,125
  378,853
Variable operating expenses, $m
 
  1,422
  2,180
  3,245
  4,695
  6,612
  9,078
  12,175
  15,977
  20,549
  25,947
  32,183
  39,347
  47,426
  56,428
  66,349
  77,180
  88,905
  101,505
  114,959
  129,248
  144,353
  160,258
  176,951
  194,424
  212,675
  231,706
  251,525
  272,146
  293,587
  315,872
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  917
  1,422
  2,180
  3,245
  4,695
  6,612
  9,078
  12,175
  15,977
  20,549
  25,947
  32,183
  39,347
  47,426
  56,428
  66,349
  77,180
  88,905
  101,505
  114,959
  129,248
  144,353
  160,258
  176,951
  194,424
  212,675
  231,706
  251,525
  272,146
  293,587
  315,872
Operating income, $m
  127
  247
  398
  611
  900
  1,282
  1,773
  2,391
  3,149
  4,061
  5,137
  6,417
  7,845
  9,456
  11,251
  13,229
  15,389
  17,727
  20,239
  22,922
  25,771
  28,783
  31,954
  35,282
  38,766
  42,405
  46,200
  50,152
  54,263
  58,538
  62,982
EBITDA, $m
  161
  331
  512
  766
  1,111
  1,568
  2,156
  2,893
  3,799
  4,889
  6,175
  7,668
  9,374
  11,299
  13,444
  15,808
  18,388
  21,182
  24,183
  27,389
  30,793
  34,392
  38,181
  42,159
  46,322
  50,670
  55,204
  59,926
  64,839
  69,947
  75,256
Interest expense (income), $m
  7
  24
  63
  118
  196
  303
  444
  625
  852
  1,132
  1,467
  1,864
  2,324
  2,850
  3,444
  4,105
  4,833
  5,629
  6,490
  7,416
  8,404
  9,453
  10,563
  11,731
  12,957
  14,240
  15,581
  16,978
  18,434
  19,949
  21,523
Earnings before tax, $m
  155
  223
  336
  492
  703
  979
  1,330
  1,766
  2,297
  2,929
  3,670
  4,553
  5,521
  6,606
  7,807
  9,125
  10,555
  12,098
  13,749
  15,506
  17,367
  19,329
  21,391
  23,551
  25,809
  28,165
  30,619
  33,173
  35,829
  38,589
  41,458
Tax expense, $m
  34
  60
  91
  133
  190
  264
  359
  477
  620
  791
  991
  1,229
  1,491
  1,784
  2,108
  2,464
  2,850
  3,266
  3,712
  4,187
  4,689
  5,219
  5,776
  6,359
  6,969
  7,605
  8,267
  8,957
  9,674
  10,419
  11,194
Net income, $m
  117
  163
  245
  359
  513
  714
  971
  1,289
  1,677
  2,138
  2,679
  3,324
  4,031
  4,822
  5,699
  6,661
  7,705
  8,831
  10,037
  11,319
  12,678
  14,110
  15,616
  17,192
  18,841
  20,560
  22,352
  24,216
  26,155
  28,170
  30,264

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  700
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,829
  2,867
  4,430
  6,625
  9,613
  13,562
  18,645
  25,027
  32,862
  42,285
  53,410
  66,323
  81,086
  97,736
  116,287
  136,732
  159,053
  183,215
  209,181
  236,909
  266,356
  297,484
  330,261
  364,662
  400,671
  438,282
  477,502
  518,345
  560,841
  605,026
  650,951
Adjusted assets (=assets-cash), $m
  1,129
  2,867
  4,430
  6,625
  9,613
  13,562
  18,645
  25,027
  32,862
  42,285
  53,410
  66,323
  81,086
  97,736
  116,287
  136,732
  159,053
  183,215
  209,181
  236,909
  266,356
  297,484
  330,261
  364,662
  400,671
  438,282
  477,502
  518,345
  560,841
  605,026
  650,951
Revenue / Adjusted assets
  0.924
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
Average production assets, $m
  161
  541
  835
  1,249
  1,813
  2,557
  3,516
  4,719
  6,197
  7,974
  10,071
  12,506
  15,290
  18,430
  21,928
  25,783
  29,992
  34,549
  39,445
  44,673
  50,226
  56,096
  62,277
  68,764
  75,554
  82,646
  90,042
  97,743
  105,757
  114,089
  122,749
Working capital, $m
  204
  -42
  -64
  -96
  -140
  -197
  -271
  -364
  -478
  -615
  -777
  -965
  -1,180
  -1,422
  -1,692
  -1,989
  -2,314
  -2,666
  -3,044
  -3,447
  -3,875
  -4,328
  -4,805
  -5,306
  -5,830
  -6,377
  -6,948
  -7,542
  -8,160
  -8,803
  -9,471
Total debt, $m
  450
  1,158
  2,189
  3,638
  5,610
  8,216
  11,571
  15,783
  20,954
  27,174
  34,516
  43,038
  52,782
  63,771
  76,014
  89,509
  104,240
  120,187
  137,325
  155,625
  175,060
  195,605
  217,238
  239,942
  263,708
  288,532
  314,416
  341,373
  369,420
  398,582
  428,893
Total liabilities, $m
  1,185
  1,892
  2,924
  4,373
  6,344
  8,951
  12,306
  16,518
  21,689
  27,908
  35,251
  43,773
  53,517
  64,506
  76,749
  90,243
  104,975
  120,922
  138,060
  156,360
  175,795
  196,340
  217,972
  240,677
  264,443
  289,266
  315,151
  342,108
  370,155
  399,317
  429,628
Total equity, $m
  644
  975
  1,506
  2,253
  3,268
  4,611
  6,339
  8,509
  11,173
  14,377
  18,159
  22,550
  27,569
  33,230
  39,537
  46,489
  54,078
  62,293
  71,122
  80,549
  90,561
  101,145
  112,289
  123,985
  136,228
  149,016
  162,351
  176,237
  190,686
  205,709
  221,323
Total liabilities and equity, $m
  1,829
  2,867
  4,430
  6,626
  9,612
  13,562
  18,645
  25,027
  32,862
  42,285
  53,410
  66,323
  81,086
  97,736
  116,286
  136,732
  159,053
  183,215
  209,182
  236,909
  266,356
  297,485
  330,261
  364,662
  400,671
  438,282
  477,502
  518,345
  560,841
  605,026
  650,951
Debt-to-equity ratio
  0.699
  1.190
  1.450
  1.610
  1.720
  1.780
  1.830
  1.850
  1.880
  1.890
  1.900
  1.910
  1.910
  1.920
  1.920
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.940
  1.940
  1.940
  1.940
  1.940
  1.940
  1.940
  1.940
Adjusted equity ratio
  -0.050
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  117
  163
  245
  359
  513
  714
  971
  1,289
  1,677
  2,138
  2,679
  3,324
  4,031
  4,822
  5,699
  6,661
  7,705
  8,831
  10,037
  11,319
  12,678
  14,110
  15,616
  17,192
  18,841
  20,560
  22,352
  24,216
  26,155
  28,170
  30,264
Depreciation, amort., depletion, $m
  34
  85
  114
  155
  212
  286
  382
  502
  650
  828
  1,038
  1,251
  1,529
  1,843
  2,193
  2,578
  2,999
  3,455
  3,944
  4,467
  5,023
  5,610
  6,228
  6,876
  7,555
  8,265
  9,004
  9,774
  10,576
  11,409
  12,275
Funds from operations, $m
  549
  247
  359
  515
  725
  1,001
  1,353
  1,792
  2,327
  2,966
  3,717
  4,574
  5,560
  6,665
  7,892
  9,239
  10,705
  12,286
  13,981
  15,787
  17,701
  19,720
  21,843
  24,069
  26,396
  28,825
  31,356
  33,991
  36,731
  39,579
  42,539
Change in working capital, $m
  189
  -16
  -23
  -32
  -43
  -57
  -74
  -93
  -114
  -137
  -162
  -188
  -215
  -242
  -270
  -297
  -325
  -352
  -378
  -403
  -428
  -453
  -477
  -501
  -524
  -547
  -571
  -594
  -618
  -643
  -668
Cash from operations, $m
  360
  263
  382
  547
  769
  1,058
  1,427
  1,885
  2,441
  3,103
  3,878
  4,762
  5,774
  6,908
  8,162
  9,537
  11,029
  12,638
  14,359
  16,190
  18,129
  20,173
  22,320
  24,569
  26,920
  29,372
  31,927
  34,585
  37,349
  40,222
  43,207
Maintenance CAPEX, $m
  0
  -34
  -54
  -84
  -125
  -181
  -256
  -352
  -472
  -620
  -797
  -1,007
  -1,251
  -1,529
  -1,843
  -2,193
  -2,578
  -2,999
  -3,455
  -3,944
  -4,467
  -5,023
  -5,610
  -6,228
  -6,876
  -7,555
  -8,265
  -9,004
  -9,774
  -10,576
  -11,409
New CAPEX, $m
  -71
  -203
  -295
  -414
  -563
  -745
  -958
  -1,203
  -1,477
  -1,777
  -2,098
  -2,435
  -2,784
  -3,140
  -3,498
  -3,855
  -4,209
  -4,556
  -4,896
  -5,229
  -5,553
  -5,870
  -6,181
  -6,487
  -6,790
  -7,092
  -7,396
  -7,702
  -8,013
  -8,332
  -8,660
Cash from investing activities, $m
  -518
  -237
  -349
  -498
  -688
  -926
  -1,214
  -1,555
  -1,949
  -2,397
  -2,895
  -3,442
  -4,035
  -4,669
  -5,341
  -6,048
  -6,787
  -7,555
  -8,351
  -9,173
  -10,020
  -10,893
  -11,791
  -12,715
  -13,666
  -14,647
  -15,661
  -16,706
  -17,787
  -18,908
  -20,069
Free cash flow, $m
  -158
  26
  33
  49
  80
  132
  213
  330
  491
  707
  983
  1,320
  1,740
  2,239
  2,821
  3,489
  4,242
  5,082
  6,008
  7,017
  8,109
  9,280
  10,530
  11,855
  13,254
  14,725
  16,267
  17,879
  19,562
  21,314
  23,139
Issuance/(repayment) of debt, $m
  213
  708
  1,031
  1,449
  1,972
  2,607
  3,355
  4,212
  5,171
  6,219
  7,342
  8,523
  9,744
  10,989
  12,243
  13,494
  14,731
  15,947
  17,138
  18,300
  19,435
  20,545
  21,633
  22,705
  23,766
  24,824
  25,885
  26,957
  28,047
  29,162
  30,310
Issuance/(repurchase) of shares, $m
  2
  204
  286
  387
  503
  628
  757
  881
  987
  1,066
  1,103
  1,067
  989
  839
  608
  291
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  198
  912
  1,317
  1,836
  2,475
  3,235
  4,112
  5,093
  6,158
  7,285
  8,445
  9,590
  10,733
  11,828
  12,851
  13,785
  14,731
  15,947
  17,138
  18,300
  19,435
  20,545
  21,633
  22,705
  23,766
  24,824
  25,885
  26,957
  28,047
  29,162
  30,310
Total cash flow (excl. dividends), $m
  36
  938
  1,351
  1,885
  2,555
  3,367
  4,325
  5,422
  6,650
  7,992
  9,429
  10,909
  12,473
  14,067
  15,672
  17,273
  18,974
  21,030
  23,145
  25,317
  27,544
  29,825
  32,163
  34,559
  37,020
  39,548
  42,151
  44,836
  47,608
  50,477
  53,449
Retained Cash Flow (-), $m
  -207
  -366
  -531
  -746
  -1,016
  -1,343
  -1,728
  -2,170
  -2,664
  -3,204
  -3,782
  -4,390
  -5,019
  -5,661
  -6,307
  -6,952
  -7,589
  -8,215
  -8,828
  -9,427
  -10,012
  -10,584
  -11,144
  -11,696
  -12,243
  -12,788
  -13,335
  -13,887
  -14,448
  -15,023
  -15,614
Prev. year cash balance distribution, $m
 
  35
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  37
  58
  90
  135
  196
  276
  380
  510
  669
  861
  1,088
  1,351
  1,652
  1,991
  2,369
  2,785
  3,240
  3,732
  4,261
  4,826
  5,426
  6,060
  6,727
  7,428
  8,162
  8,928
  9,727
  10,559
  11,424
  12,324
Cash available for distribution, $m
 
  607
  819
  1,139
  1,539
  2,024
  2,596
  3,252
  3,986
  4,788
  5,647
  6,519
  7,453
  8,406
  9,365
  10,322
  11,385
  12,814
  14,317
  15,890
  17,532
  19,242
  21,018
  22,863
  24,776
  26,760
  28,817
  30,949
  33,160
  35,454
  37,835
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  582
  750
  991
  1,267
  1,569
  1,884
  2,197
  2,491
  2,750
  2,960
  3,096
  3,180
  3,196
  3,144
  3,030
  2,893
  2,788
  2,637
  2,447
  2,228
  1,990
  1,744
  1,498
  1,262
  1,041
  841
  664
  513
  387
  285
Current shareholders' claim on cash, %
  100
  96.8
  94.0
  91.6
  89.6
  88.0
  86.5
  85.3
  84.4
  83.6
  82.9
  82.5
  82.1
  81.8
  81.7
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6
  81.6

TAL Education Group is a holding company for a group of companies engaged in provision of after-school tutoring programs for primary and secondary school students in the People's Republic of China (the PRC). The Company is a K-12 after-school tutoring services provider in China. The Company's Xueersi Peiyou small classes course consists of approximately four semesters, which include approximately two school semesters in Spring and Fall, and approximately two holiday semesters in summer and winter. It operates a Website, www.jzb.com, which is an online education platform in China. It offers personalized premium services under its Zhikang brand. It offers online courses through www.xueersi.com. Through www.xueersi.com, the Company offers online courses on mathematics, English, Chinese, physics, chemistry, biology and other subjects. It also offers select online courses through other Websites. The Company has over 10 call centers in Beijing, Shanghai, Tianjin, Guangzhou and Shenzhen.

FINANCIAL RATIOS  of  TAL Education Group ADR (TAL)

Valuation Ratios
P/E Ratio 56.6
Price to Sales 6.4
Price to Book 10.3
Price to Tangible Book
Price to Cash Flow 18.4
Price to Free Cash Flow 22.9
Growth Rates
Sales Growth Rate 68.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 102.9%
Cap. Spend. - 3 Yr. Gr. Rate 45.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 69.9%
Total Debt to Equity 69.9%
Interest Coverage 23
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 10.6%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 15.7%
Return On Equity 21.6%
Return On Equity - 3 Yr. Avg. 24.2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 51.4%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 22.1%
Operating Margin 12.1%
Oper. Margin - 3 Yr. Avg. 13.4%
Pre-Tax Margin 14.9%
Pre-Tax Margin - 3 Yr. Avg. 18.2%
Net Profit Margin 11.2%
Net Profit Margin - 3 Yr. Avg. 14.4%
Effective Tax Rate 21.9%
Eff/ Tax Rate - 3 Yr. Avg. 19.5%
Payout Ratio 0%

TAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TAL stock intrinsic value calculation we used $1043 million for the last fiscal year's total revenue generated by TAL Education Group ADR. The default revenue input number comes from 2017 income statement of TAL Education Group ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TAL stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for TAL is calculated based on our internal credit rating of TAL Education Group ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of TAL Education Group ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TAL stock the variable cost ratio is equal to 86.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TAL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for TAL Education Group ADR.

Corporate tax rate of 27% is the nominal tax rate for TAL Education Group ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TAL stock is equal to 3.5%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TAL are equal to 32.4%.

Life of production assets of 10 years is the average useful life of capital assets used in TAL Education Group ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TAL is equal to -2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $644 million for TAL Education Group ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 975 million for TAL Education Group ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of TAL Education Group ADR at the current share price and the inputted number of shares is $39.3 billion.

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COMPANY NEWS

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Financial statements of TAL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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