Analyzing TAL Education Group (NYSE:TAL) and Arco Platform (NYSE:ARCE)

TAL Education Group (NYSE:TAL) and Arco Platform (NASDAQ:ARCE) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Institutional and Insider Ownership

60.1% of TAL Education Group shares are held by institutional investors. Comparatively, 90.8% of Arco Platform shares are held by institutional investors. 1.8% of TAL Education Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for TAL Education Group and Arco Platform, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TAL Education Group 0 3 5 0 2.63
Arco Platform 0 1 4 0 2.80

TAL Education Group currently has a consensus target price of $39.58, suggesting a potential upside of 10.25%. Arco Platform has a consensus target price of $27.00, suggesting a potential downside of 40.00%. Given TAL Education Group’s higher possible upside, research analysts plainly believe TAL Education Group is more favorable than Arco Platform.

Earnings & Valuation

This table compares TAL Education Group and Arco Platform’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TAL Education Group $2.56 billion 7.94 $367.24 million $0.61 58.85
Arco Platform $100.06 million 10.21 $6.13 million $0.27 166.67

TAL Education Group has higher revenue and earnings than Arco Platform. TAL Education Group is trading at a lower price-to-earnings ratio than Arco Platform, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TAL Education Group and Arco Platform’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TAL Education Group 14.33% 18.28% 10.18%
Arco Platform N/A N/A N/A

Summary

TAL Education Group beats Arco Platform on 9 of the 13 factors compared between the two stocks.

About TAL Education Group

TAL Education Group provides K-12 after-school tutoring services in the People's Republic of China. It offers tutoring services to K-12 students covering various academic subjects, including mathematics, physics, chemistry, biology, history, geography, political science, English, and Chinese. The company also provides tutoring services primarily through small classes under the Xueersi, Mobby, and Firstleap brand names; personalized premium services under Izhikang name; and online courses. In addition, it operates jzb.com, an online education platform that serves as a gateway for online courses offered through xueersi.com; and other Websites for specific topics and offerings, such as college entrance examinations, high school entrance examinations, graduate school entrance examinations, preschool education, and raising infants and toddlers, as well as mathematics, English, and Chinese composition. Further, the company provides educational content through mobile applications; operates mmbang.com and the Mama Bang app, an online platform focusing on children, baby, and maternity market; and provides consulting services for overseas studies under the Shunshun Liuxue name. Additionally, it offers tutoring services for students aged two through twelve under the Mobby brand; provides education and management consulting, and investment management and consulting services; and develops and sells software and networks, as well as offers related consulting services. The company also provides online advertising services; and engages in the sale of educational materials. As of February 28, 2018, the company's educational network included 594 learning centers and 465 service centers in 42 cities. TAL Education Group has a strategic agreement with the United Nations Educational, Scientific and Cultural Organization to promote future education through artificial intelligence. The company was founded in 2003 and is headquartered in Beijing, the People's Republic of China.

About Arco Platform

Arco Platform Limited, a technology company in the education sector, provides a pedagogical system with technology-enabled features to deliver educational content to private schools in Brazil. The company's curriculum solutions provide educational content from basic to secondary education K-12 curriculum in printed and digital formats delivered through its platform. As of March 31, 2019, it had a network consisted of 1,462 partner schools and 498,553 enrolled students. The company's activities also comprise editing, publishing, advertising, and sale of educational content for private schools. It serves students, teachers, administrators, and parents. The company was founded in 2004 and is based in Sao Paulo, Brazil.

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