K12 (NYSE: LRN) and TAL Education Group (NYSE:TAL) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.

Risk and Volatility

K12 has a beta of -0.24, indicating that its share price is 124% less volatile than the S&P 500. Comparatively, TAL Education Group has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500.

Profitability

This table compares K12 and TAL Education Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K12 0.05% 3.18% 2.40%
TAL Education Group 11.14% 19.47% 7.05%

Valuation & Earnings

This table compares K12 and TAL Education Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
K12 $888.52 million 0.80 $35.91 million N/A N/A
TAL Education Group $1.17 billion 13.61 $182.99 million $0.24 133.29

TAL Education Group has higher revenue and earnings than K12.

Analyst Recommendations

This is a summary of current recommendations for K12 and TAL Education Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K12 0 0 2 0 3.00
TAL Education Group 0 2 9 0 2.82

K12 presently has a consensus price target of $18.50, indicating a potential upside of 5.65%. TAL Education Group has a consensus price target of $26.79, indicating a potential downside of 16.82%. Given K12’s stronger consensus rating and higher possible upside, analysts clearly believe K12 is more favorable than TAL Education Group.

Institutional and Insider Ownership

79.5% of K12 shares are held by institutional investors. Comparatively, 8.6% of TAL Education Group shares are held by institutional investors. 18.3% of K12 shares are held by insiders. Comparatively, 1.8% of TAL Education Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

TAL Education Group beats K12 on 9 of the 13 factors compared between the two stocks.

K12 Company Profile

K12 Inc. (K12) is a technology-based education company. The Company offers curriculum, software systems and educational services designed to facilitate individualized learning for students in kindergarten through 12th grade (K-12). It provides a continuum of technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools and families. The Company offers a set of products and services primarily to three lines of business, which include Managed Public School Programs, which consists of virtual and blended schools; Institutional business, which includes educational products and services sold to school districts, public schools and other educational institutions, and Private Pay Schools and Other, which includes private schools, including international, for which it charges student tuition and direct consumer sales. It sells individual online courses and supplemental educational products directly to families.

TAL Education Group Company Profile

TAL Education Group is a holding company for a group of companies engaged in provision of after-school tutoring programs for primary and secondary school students in the People’s Republic of China (the PRC). The Company is a K-12 after-school tutoring services provider in China. The Company’s Xueersi Peiyou small classes course consists of approximately four semesters, which include approximately two school semesters in Spring and Fall, and approximately two holiday semesters in summer and winter. It operates a Website, www.jzb.com, which is an online education platform in China. It offers personalized premium services under its Zhikang brand. It offers online courses through www.xueersi.com. Through www.xueersi.com, the Company offers online courses on mathematics, English, Chinese, physics, chemistry, biology and other subjects. It also offers select online courses through other Websites. The Company has over 10 call centers in Beijing, Shanghai, Tianjin, Guangzhou and Shenzhen.

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