TAL Education shares surge 19% on earnings beat
Chinese education company posts 465% profit jump as AI-driven turnaround gains momentum
TAL Education Group shares soared 18.9% to $12.80 on Wednesday after the Beijing-based company reported third-quarter results that far exceeded Wall Street expectations, signaling a successful turnaround following China's crackdown on the private tutoring sector.
The company reported earnings per share of $0.23 for the third fiscal quarter ended November 30, 2025, crushing analyst estimates of $0.04. Net income surged 465% to $130.6 million, up from $23.1 million in the same period last year, according to the company's press release. Revenue climbed 27% year-over-year to $770.2 million, with gross margin expanding to 56.1% from 52.7% in the prior-year quarter.
The dramatic profit turnaround comes as TAL has pivoted its business model following China's 2021 regulatory overhaul that effectively banned for-profit tutoring in core academic subjects. The company has since focused on AI-powered learning devices, content licensing, and non-academic programs such as arts, science, and coding courses.
Analysts have taken notice of the recovery. The stock currently carries an average target price of $14.65 among analysts, with 17 of 20 analysts rating it a buy or strong buy and three rating it a hold, market data shows. The consensus suggests further upside of approximately 15% from current levels.
Wednesday's surge brings TAL's year-to-date gains to roughly 50%, though shares remain below their 52-week high of $15.30 reached last November. The stock has rebounded sharply from its 52-week low of $8.50, reflecting growing investor confidence in the company's transformation strategy.
The company's trailing price-to-earnings ratio stands at 38, though the forward P/E of 19.8 suggests the market expects continued earnings growth. Quarterly revenue growth of 39.1% and earnings growth of 128.6% on a trailing twelve-month basis indicate TAL is successfully scaling its new business lines.
Institutional investors hold 56.5% of TAL's shares, with the company commanding a market capitalization of $6.48 billion. The low beta of 0.05 indicates the stock has historically exhibited minimal correlation with broader market movements, making its performance largely dependent on company-specific news and China's education policy environment.
The earnings beat extends a streak of positive momentum for Chinese education stocks, which have been recovering from the regulatory shock of 2021. Companies that successfully adapted their business models have seen investor confidence return as China's government has signaled a more balanced approach to the education sector while encouraging technological innovation in learning.
Looking ahead, investors will focus on TAL's ability to sustain margin expansion and whether its AI-driven learning platforms can continue driving revenue growth without the core tutoring business that once powered its expansion. The company's forward valuation of roughly 20 times earnings suggests expectations remain measured relative to its growth trajectory.