What happened
Shares of TAL Education Group (TAL 2.01%) jumped today after the Chinese education stock posted better-than-expected results in its second-quarter earnings report.
The stock finished the day up 10.1% as a result.
So what
After the Chinese government banned for-profit core academic tutoring services for K-12 students last year, TAL was forced to close most of its business and focus instead on adjacent markets.
As a result, revenue in the quarter fell 80% to $294 million, but that was actually better than analyst estimates at $242.6 million. The company also posted a profit despite the challenges from the policy change as it reported operating income of $14.9 million, or $42.3 million after adjustments.
On the bottom line, adjusted earnings per share came in at $0.04, which was better than estimates at $0.01.
CFO Alex Peng said: "Our business has shown a healthy momentum in this quarter. We will continue to invest in learning services, learning content solutions and learning technology solutions to lay the foundation for long-term growth."
Now what
TAL's second-quarter results follow a similarly strong report by peer New Oriental Education Group. Together, the reports seem to show that the Chinese education sector has responded well to the new restrictions on for-profit tutoring, and though revenue is unlikely to return to its previous heights, these businesses are profitable and growing on a sequential basis.
At this stage in the recovery, that's enough to please investors.
