TAL Education Group (NYSE:TAL) versus Gaotu Techedu (NYSE:GOTU) Head to Head Comparison

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

Institutional & Insider Ownership

37.8% of TAL Education Group shares are held by institutional investors. Comparatively, 48.4% of Gaotu Techedu shares are held by institutional investors. 1.8% of TAL Education Group shares are held by insiders. Comparatively, 44.9% of Gaotu Techedu shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TAL Education Group	22.13%	18.96%	11.64%
Gaotu Techedu	-5.00%	-26.89%	-5.73%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for TAL Education Group and Gaotu Techedu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TAL Education Group	0	2	1	1	2.75
Gaotu Techedu	1	0	0	0	1.00

TAL Education Group presently has a consensus price target of $15.05, indicating a potential upside of 51.58%. Given TAL Education Group’s stronger consensus rating and higher possible upside, analysts clearly believe TAL Education Group is more favorable than Gaotu Techedu.

Volatility & Risk

TAL Education Group has a beta of 0.22, indicating that its share price is 78% less volatile than the S&P 500. Comparatively, Gaotu Techedu has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Valuation and Earnings

This table compares TAL Education Group and Gaotu Techedu”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TAL Education Group	$3.01 billion	1.83	$530.75 million	$1.31	7.58
Gaotu Techedu	$878.98 million	0.64	-$46.23 million	($0.21)	-11.21

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

Summary

TAL Education Group beats Gaotu Techedu on 12 of the 15 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 provides learning services primarily through small-classes services; personalized premium services; and learning content solutions, such as print books, smart books, mobile apps, and AI-driven learning devices. The company also operates www.xueersi.com, an online education platform; provides investment management and consulting services; develops and sells software and networks, as well as related consulting services; and sells educational materials and products. It offers its services under the Haoweilai and Think Academy brands. TAL Education Group was founded in 2003 and is headquartered in Beijing, the People’s Republic of China.

About Gaotu Techedu

Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.