Why Shares of Xueda Education Group Fell

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Xueda Education Group  (NYSE: XUE  ) were getting held back today, falling as much 12% and finishing down 5% as the stock continued last week's post-earnings slide. 

So what: Today was the third straight session that Xueda shares have fallen sharply following its earnings report last Wednesday night, and the stock is now down 15% since the report came out. The Chinese tutoring company said revenues increased 15.9% to $69.1 million, while its adjusted net loss improved from -$0.11 per ADS a year ago to -$0.04, which actually beat estimates of -$0.07 per ADS. For the full year, the company still reported an adjusted profit of $0.32 as CEO Xin Jin called 2013 "a transformative year" during which the company saw profit increase sevenfold.

Now what: Despite the better-than-expected quarter, what seemed to cool off the stock was weak full-year revenue guidance as Xueda projected top-line growth of at least 13.5% to $394 million. Analysts had expected a 19% growth clip to $413 million. Still, profit projections were ahead of estimates, and the company also initiated a dividend of $0.04-per-ADS a quarter, good enough for a 3% yield. Given the strong bottom-line numbers and new dividend, I'd say the extended slide seems exaggerated.

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