Intrinsic value of TAL Education Group ADR - TAL

Previous Close

$34.91

  Intrinsic Value

$109.45

stock screener

  Rating & Target

str. buy

+214%

Previous close

$34.91

 
Intrinsic value

$109.45

 
Up/down potential

+214%

 
Rating

str. 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

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.4

 

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
 
  1,443
  2,214
  3,298
  4,773
  6,723
  9,233
  12,384
  16,253
  20,906
  26,399
  32,748
  40,038
  48,259
  57,419
  67,514
  78,535
  90,466
  103,287
  116,978
  131,518
  146,889
  163,073
  180,059
  197,839
  216,410
  235,776
  255,943
  276,926
  298,743
  321,420
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
  1,443
  2,214
  3,298
  4,773
  6,723
  9,233
  12,384
  16,253
  20,906
  26,399
  32,748
  40,038
  48,259
  57,419
  67,514
  78,535
  90,466
  103,287
  116,978
  131,518
  146,889
  163,073
  180,059
  197,839
  216,410
  235,776
  255,943
  276,926
  298,743
  321,420
Operating income, $m
  127
  226
  364
  558
  821
  1,170
  1,618
  2,181
  2,873
  3,704
  4,686
  5,852
  7,154
  8,623
  10,260
  12,064
  14,033
  16,165
  18,456
  20,903
  23,501
  26,247
  29,139
  32,174
  35,351
  38,670
  42,130
  45,734
  49,483
  53,382
  57,434
EBITDA, $m
  161
  279
  431
  645
  935
  1,319
  1,814
  2,435
  3,197
  4,114
  5,196
  6,452
  7,888
  9,508
  11,313
  13,302
  15,473
  17,824
  20,350
  23,047
  25,912
  28,940
  32,129
  35,476
  38,979
  42,638
  46,453
  50,427
  54,561
  58,859
  63,327
Interest expense (income), $m
  7
  16
  31
  62
  106
  165
  243
  344
  471
  626
  813
  1,034
  1,290
  1,583
  1,913
  2,282
  2,687
  3,130
  3,609
  4,125
  4,675
  5,259
  5,877
  6,527
  7,209
  7,924
  8,670
  9,448
  10,259
  11,102
  11,979
Earnings before tax, $m
  155
  211
  333
  496
  716
  1,005
  1,375
  1,837
  2,402
  3,078
  3,872
  4,818
  5,864
  7,040
  8,347
  9,782
  11,346
  13,035
  14,847
  16,778
  18,826
  20,988
  23,263
  25,647
  28,142
  30,746
  33,460
  36,286
  39,225
  42,280
  45,455
Tax expense, $m
  34
  57
  90
  134
  193
  271
  371
  496
  649
  831
  1,046
  1,301
  1,583
  1,901
  2,254
  2,641
  3,063
  3,520
  4,009
  4,530
  5,083
  5,667
  6,281
  6,925
  7,598
  8,301
  9,034
  9,797
  10,591
  11,416
  12,273
Net income, $m
  117
  154
  243
  362
  522
  734
  1,004
  1,341
  1,753
  2,247
  2,827
  3,517
  4,281
  5,139
  6,093
  7,141
  8,283
  9,516
  10,838
  12,248
  13,743
  15,321
  16,982
  18,723
  20,544
  22,445
  24,426
  26,489
  28,634
  30,864
  33,182

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
  1,806
  2,790
  4,173
  6,055
  8,542
  11,744
  15,764
  20,699
  26,634
  33,641
  41,775
  51,074
  61,561
  73,245
  86,124
  100,183
  115,402
  131,757
  149,222
  167,770
  187,376
  208,022
  229,690
  252,371
  276,061
  300,764
  326,490
  353,257
  381,088
  410,015
Adjusted assets (=assets-cash), $m
  1,129
  1,806
  2,790
  4,173
  6,055
  8,542
  11,744
  15,764
  20,699
  26,634
  33,641
  41,775
  51,074
  61,561
  73,245
  86,124
  100,183
  115,402
  131,757
  149,222
  167,770
  187,376
  208,022
  229,690
  252,371
  276,061
  300,764
  326,490
  353,257
  381,088
  410,015
Revenue / Adjusted assets
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
  0.924
Average production assets, $m
  161
  257
  397
  594
  862
  1,216
  1,671
  2,243
  2,945
  3,790
  4,787
  5,944
  7,268
  8,760
  10,423
  12,255
  14,256
  16,421
  18,749
  21,234
  23,873
  26,663
  29,601
  32,684
  35,911
  39,282
  42,798
  46,458
  50,267
  54,227
  58,343
Working capital, $m
  204
  -794
  -1,227
  -1,835
  -2,663
  -3,757
  -5,165
  -6,933
  -9,104
  -11,714
  -14,796
  -18,374
  -22,463
  -27,076
  -32,215
  -37,879
  -44,063
  -50,757
  -57,950
  -65,631
  -73,789
  -82,413
  -91,493
  -101,023
  -110,999
  -121,418
  -132,283
  -143,598
  -155,371
  -167,612
  -180,334
Total debt, $m
  450
  890
  1,776
  3,021
  4,714
  6,953
  9,835
  13,452
  17,894
  23,236
  29,542
  36,862
  45,231
  54,670
  65,186
  76,776
  89,429
  103,127
  117,846
  133,565
  150,258
  167,904
  186,484
  205,986
  226,399
  247,720
  269,953
  293,106
  317,196
  342,244
  368,278
Total liabilities, $m
  1,185
  1,625
  2,511
  3,756
  5,449
  7,688
  10,570
  14,187
  18,629
  23,971
  30,277
  37,597
  45,966
  55,405
  65,921
  77,511
  90,164
  103,862
  118,581
  134,300
  150,993
  168,639
  187,219
  206,721
  227,134
  248,455
  270,688
  293,841
  317,931
  342,979
  369,013
Total equity, $m
  644
  181
  279
  417
  605
  854
  1,174
  1,576
  2,070
  2,663
  3,364
  4,177
  5,107
  6,156
  7,325
  8,612
  10,018
  11,540
  13,176
  14,922
  16,777
  18,738
  20,802
  22,969
  25,237
  27,606
  30,076
  32,649
  35,326
  38,109
  41,001
Total liabilities and equity, $m
  1,829
  1,806
  2,790
  4,173
  6,054
  8,542
  11,744
  15,763
  20,699
  26,634
  33,641
  41,774
  51,073
  61,561
  73,246
  86,123
  100,182
  115,402
  131,757
  149,222
  167,770
  187,377
  208,021
  229,690
  252,371
  276,061
  300,764
  326,490
  353,257
  381,088
  410,014
Debt-to-equity ratio
  0.699
  4.930
  6.370
  7.240
  7.790
  8.140
  8.370
  8.530
  8.640
  8.720
  8.780
  8.820
  8.860
  8.880
  8.900
  8.910
  8.930
  8.940
  8.940
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
Adjusted equity ratio
  -0.050
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  117
  154
  243
  362
  522
  734
  1,004
  1,341
  1,753
  2,247
  2,827
  3,517
  4,281
  5,139
  6,093
  7,141
  8,283
  9,516
  10,838
  12,248
  13,743
  15,321
  16,982
  18,723
  20,544
  22,445
  24,426
  26,489
  28,634
  30,864
  33,182
Depreciation, amort., depletion, $m
  34
  53
  67
  87
  114
  149
  195
  253
  324
  410
  510
  600
  734
  885
  1,053
  1,238
  1,440
  1,659
  1,894
  2,145
  2,411
  2,693
  2,990
  3,301
  3,627
  3,968
  4,323
  4,693
  5,077
  5,478
  5,893
Funds from operations, $m
  549
  206
  310
  449
  636
  883
  1,199
  1,594
  2,078
  2,656
  3,337
  4,117
  5,015
  6,024
  7,146
  8,379
  9,723
  11,174
  12,732
  14,393
  16,154
  18,015
  19,972
  22,024
  24,171
  26,413
  28,749
  31,181
  33,711
  36,342
  39,076
Change in working capital, $m
  189
  -298
  -433
  -608
  -828
  -1,094
  -1,408
  -1,768
  -2,171
  -2,611
  -3,082
  -3,577
  -4,090
  -4,613
  -5,139
  -5,664
  -6,183
  -6,694
  -7,193
  -7,681
  -8,158
  -8,624
  -9,080
  -9,530
  -9,976
  -10,420
  -10,865
  -11,315
  -11,773
  -12,241
  -12,723
Cash from operations, $m
  360
  504
  743
  1,057
  1,464
  1,977
  2,607
  3,362
  4,248
  5,267
  6,419
  7,695
  9,105
  10,637
  12,285
  14,043
  15,906
  17,868
  19,925
  22,074
  24,312
  26,638
  29,052
  31,554
  34,147
  36,832
  39,614
  42,496
  45,484
  48,583
  51,798
Maintenance CAPEX, $m
  0
  -16
  -26
  -40
  -60
  -87
  -123
  -169
  -227
  -298
  -383
  -484
  -600
  -734
  -885
  -1,053
  -1,238
  -1,440
  -1,659
  -1,894
  -2,145
  -2,411
  -2,693
  -2,990
  -3,301
  -3,627
  -3,968
  -4,323
  -4,693
  -5,077
  -5,478
New CAPEX, $m
  -71
  -96
  -140
  -197
  -268
  -354
  -456
  -572
  -702
  -845
  -997
  -1,157
  -1,323
  -1,492
  -1,663
  -1,833
  -2,001
  -2,166
  -2,327
  -2,485
  -2,639
  -2,790
  -2,938
  -3,083
  -3,227
  -3,371
  -3,515
  -3,661
  -3,809
  -3,960
  -4,116
Cash from investing activities, $m
  -518
  -112
  -166
  -237
  -328
  -441
  -579
  -741
  -929
  -1,143
  -1,380
  -1,641
  -1,923
  -2,226
  -2,548
  -2,886
  -3,239
  -3,606
  -3,986
  -4,379
  -4,784
  -5,201
  -5,631
  -6,073
  -6,528
  -6,998
  -7,483
  -7,984
  -8,502
  -9,037
  -9,594
Free cash flow, $m
  -158
  392
  577
  820
  1,136
  1,536
  2,029
  2,622
  3,319
  4,125
  5,039
  6,054
  7,181
  8,410
  9,737
  11,158
  12,668
  14,263
  15,939
  17,695
  19,528
  21,437
  23,421
  25,481
  27,618
  29,834
  32,131
  34,513
  36,982
  39,545
  42,205
Issuance/(repayment) of debt, $m
  213
  440
  886
  1,244
  1,694
  2,239
  2,881
  3,618
  4,442
  5,342
  6,306
  7,320
  8,369
  9,439
  10,516
  11,590
  12,653
  13,697
  14,720
  15,718
  16,693
  17,646
  18,581
  19,501
  20,413
  21,321
  22,233
  23,154
  24,090
  25,048
  26,034
Issuance/(repurchase) of shares, $m
  2
  83
  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 from financing (excl. dividends), $m  
  198
  523
  886
  1,244
  1,694
  2,239
  2,881
  3,618
  4,442
  5,342
  6,306
  7,320
  8,369
  9,439
  10,516
  11,590
  12,653
  13,697
  14,720
  15,718
  16,693
  17,646
  18,581
  19,501
  20,413
  21,321
  22,233
  23,154
  24,090
  25,048
  26,034
Total cash flow (excl. dividends), $m
  36
  915
  1,463
  2,064
  2,830
  3,775
  4,910
  6,240
  7,761
  9,467
  11,345
  13,374
  15,550
  17,849
  20,253
  22,748
  25,321
  27,960
  30,659
  33,413
  36,221
  39,083
  42,002
  44,982
  48,031
  51,155
  54,364
  57,666
  61,072
  64,593
  68,239
Retained Cash Flow (-), $m
  -207
  -237
  -98
  -138
  -188
  -249
  -320
  -402
  -494
  -594
  -701
  -813
  -930
  -1,049
  -1,168
  -1,288
  -1,406
  -1,522
  -1,636
  -1,746
  -1,855
  -1,961
  -2,065
  -2,167
  -2,268
  -2,369
  -2,470
  -2,573
  -2,677
  -2,783
  -2,893
Prev. year cash balance distribution, $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
Cash flow adjustment, $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
Cash available for distribution, $m
 
  1,379
  1,364
  1,926
  2,642
  3,526
  4,590
  5,838
  7,267
  8,873
  10,645
  12,561
  14,620
  16,800
  19,085
  21,461
  23,915
  26,438
  29,024
  31,667
  34,366
  37,122
  39,937
  42,815
  45,763
  48,786
  51,893
  55,093
  58,396
  61,810
  65,346
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
 
  1,322
  1,249
  1,676
  2,175
  2,733
  3,331
  3,944
  4,542
  5,097
  5,581
  5,965
  6,239
  6,388
  6,407
  6,300
  6,077
  5,752
  5,345
  4,876
  4,367
  3,840
  3,314
  2,806
  2,331
  1,898
  1,514
  1,182
  903
  675
  492
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

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 49.1
Price to Sales 5.5
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow 16
Price to Free Cash Flow 19.9
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 87.4%.

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 3.5% 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 0%.

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 15.4%.

Life of production assets of 9.9 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 -47.6%. 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 499.57 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 $17.4 billion.

RELATED COMPANIES Price Int.Val. Rating
TAL TAL Education 34.91 109.45  str.buy
DL China Distance 7.55 26.45  str.buy
EDU New Oriental E 92.75 59.08  sell
ATAI ATA ADR 4.70 5.56  hold
HMHC Houghton Miffl 10.60 0.36  str.sell
CHGG Chegg 15.86 0.25  str.sell

COMPANY NEWS

▶ Should You Sell TAL Education Group (TAL) At $34.33?   [Oct-10-17 02:19PM  Simply Wall St.]
▶ 5 Chinese Education Stocks to Make the Grade   [Sep-20-17 10:23PM  Barrons.com]
▶ Analyst Picks: 3 Top Chinese Stocks to Buy   [Aug-25-17 01:09PM  Motley Fool]
▶ TAL Education: Credit Suisse Lifts Price Target by 20%   [Jul-28-17 01:56AM  Barrons.com]
▶ IBD 50's TAL Education Aces Earnings, But Stock Drops Out   [Jul-27-17 04:08PM  Investor's Business Daily]
▶ TAL Education posts 1Q profit   [03:52PM  Associated Press]
▶ New Oriental Education: Why It Has 23% Upside   [Jul-26-17 04:25AM  Barrons.com]
▶ Emerging Markets Roundup: 6 Hot Stocks   [Jul-10-17 05:57PM  Barrons.com]
▶ TAL Education Group Files Its Annual Report on Form 20-F   [Jun-29-17 04:00AM  PR Newswire]
▶ Best Chinese Stocks To Buy And Watch   [Jun-19-17 05:09PM  Investor's Business Daily]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [Jun-02-17 01:25PM  Investor's Business Daily]
▶ TAL Education, New Oriental Have More Than 20% Upside   [Jun-01-17 04:04AM  Barrons.com]
▶ What's The Secret Ingredient Behind These 5 Top Stocks' Big Price Runs?   [May-01-17 12:47PM  Investor's Business Daily]
▶ TAL Education Upgraded on Strong 4Q Earnings   [Apr-27-17 10:08PM  Barrons.com]
▶ TAL Education posts 4Q profit   [05:01AM  Associated Press]
▶ Top Chinese Play Beats Views, But Stock Hits Profit-Taking Zone   [Apr-24-17 04:03PM  Investor's Business Daily]
▶ China's Education Stocks Brush Off Cram School Crackdown   [Apr-20-17 10:42PM  Barrons.com]
▶ Stock Indexes Calm; China Stocks Rumble Higher   [Feb-10-17 12:13PM  Investor's Business Daily]
▶ Stock Indexes Nearly Flat, But Airlines Rise   [Feb-06-17 12:03PM  Investor's Business Daily]
▶ TAL Education Breaks Out From Late-Stage Base On Strong Q3   [Jan-19-17 04:09PM  Investor's Business Daily]
▶ TAL Education posts 3Q profit   [05:01AM  Associated Press]
▶ Should You Buy QAD Inc. (QADA)?   [Dec-12-16 12:27PM  at Insider Monkey]
▶ Tairen Capitals Biggest Moves On Consumer Stocks in Q3   [Dec-04-16 01:43PM  at Insider Monkey]
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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