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Why TAL Education Group’s Stock Rose 14% in July

By Demitri Kalogeropoulos – Aug 10, 2020 at 8:35AM

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Investors were happy to hear about accelerating sales growth.

What happened

TAL Education (TAL 0.48%) shareholders outpaced a booming market last month as the stock gained 14% compared to a 5.5% rally in the S&P 500 in July, according to data provided by S&P Global Market Intelligence.

The boost added to a major rally for the Chinese private education platform, which is up over 60% so far in 2020.

A young boy studies on a laptop.

Image source: Getty Images.

So what

In late July, TAL Education announced solid operating results for the three-month period that ended on May 31. This time frame showed continued pressures on its network of learning centers throughout China in the wake of COVID-19 outbreaks.

But these losses were offset by surging demand for its online education portal. Rising enrollments pushed revenue higher by 35% in the fiscal first quarter, compared to an 18% boost in the prior quarter.

Now what

CFO Rong Luo said in a press release that management is expecting bumpy results from its physical learning centers, many of which are operating under limited schedules and capacities. But the international education specialist still sees sales gains remaining elevated for the time being, with revenue set to rise by between 18% and 21% in the fiscal second quarter.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends TAL Education Group. The Motley Fool has a disclosure policy.

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