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Image source: Tarena.

What: Shares of Tarena International (NASDAQ:TEDU) fell as much as 31% on Wednesday. The Beijing-based provider of professional education services reported second-quarter results before the opening bell, missing analyst expectations across the board.

So what: In the second quarter, Tarena's net revenues increased 29% year over year to $41.3 million. On the bottom line, adjusted earnings fell from $0.12 per diluted American depositary share to $0.07 per ADS. Analysts were looking for earnings of $0.11 per ADS on $41.5 million in sales.

The company also reduced its full-year revenue guidance from approximately $183 million to $175 million, citing currency exchange headwinds. The current analyst view is in line with the previous guidance target.

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Now what: Tarena's student enrollment increased by 43%, thanks to strong demand for the company's services. The three most popular courses in the second quarter were digital art, Java programming, and iOS development. The company is building additional learning centers at a breathless pace, and the business results follow suit.

Dramatically reduced profit margins were the biggest red flags in these results, but keep in mind that the company is investing heavily in increased sales and marketing efforts. That budget increased by 63% over the year-ago period, and swallowed 41% of Tarena's incoming revenues.

In general, Tarena's high growth should be encouraging. The heavy marketing push should keep enrollment and sales growing strongly in coming quarters. Simply shrinking that budget should allow profit margins to recover nicely. For now, Tarena is choosing top-line growth over bottom-line profits.

There's nothing wrong with that growth-focused approach, especially when matched to a balance sheet with $51 million in cash equivalents and no long-term debt. Tarena shares would deserve a big cut if the skyrocketing sales were running out of high-octane fuel, but that's not the case here. The stock is being punished by 30% for a 5% revenue guidance adjustment, which appears to be a direct result of macroeconomic effects way beyond Tarena's control.

Tarena shares now trade at 26 times trailing earnings and 9 times forward estimates. That's incredibly cheap for a company growing sales 29% year over year -- in a disappointing quarter.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.