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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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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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8/31/2015 4:02 PM
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