Tarena International (TEDU) and China Online Education Group (COE) Critical Survey

China Online Education Group (NYSE: COE) and Tarena International (NASDAQ:TEDU) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, profitability and risk.

Earnings and Valuation

This table compares China Online Education Group and Tarena International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Online Education Group $60.24 million 3.61 -$74.14 million ($4.26) -2.54
Tarena International $237.84 million 3.19 $36.39 million $0.52 25.73

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

Risk and Volatility

China Online Education Group has a beta of -1.11, meaning that its stock price is 211% less volatile than the S&P 500. Comparatively, Tarena International has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500.

Insider and Institutional Ownership

27.1% of China Online Education Group shares are owned by institutional investors. Comparatively, 33.8% of Tarena International shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares China Online Education Group and Tarena International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Online Education Group -80.07% N/A -72.25%
Tarena International 11.77% 13.44% 9.71%

Analyst Recommendations

This is a breakdown of recent ratings for China Online Education Group and Tarena International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Online Education Group 0 0 0 0 N/A
Tarena International 0 5 0 0 2.00

Tarena International has a consensus target price of $20.13, indicating a potential upside of 50.41%. Given Tarena International’s higher possible upside, analysts plainly believe Tarena International is more favorable than China Online Education Group.

Dividends

Tarena International pays an annual dividend of $0.14 per share and has a dividend yield of 1.0%. China Online Education Group does not pay a dividend. Tarena International pays out 26.9% of its earnings in the form of a dividend.

Summary

Tarena International beats China Online Education Group on 10 of the 12 factors compared between the two stocks.

About China Online Education Group

China Online Education Group is engaged in providing online English language education services to students in the People’s Republic of China (the PRC). The Company operates an online education platform that provides online tutoring programs to students through the Internet. Its platform analyzes teachers’ teaching aptitudes, feedback and rating from students, as well as background, and recommends suitable teachers to students according to their respective characteristics and learning objectives. The Company develops and tailors its curriculum to its interactive lesson format. The Company offers various courses, which include Classic English and Classic English Junior that are focused on the development of English communication skills. The Company also offers various specialty courses that are focused at situation-based English education and test preparation needs, such as Business English and International English Language Testing System (IELTS) Speaking.

About Tarena International

Tarena International, Inc. (Tarena International) is a holding company. The Company, through its subsidiaries, provides professional education services, including professional information technology (IT) training courses and non-IT training courses across the People’s Republic of China (PRC). It operates through training segment. It offers courses in over 10 IT subjects and approximately three non-IT subjects, and over two kid education programs. It offers an education platform that combines live distance instruction, classroom-based tutoring and online learning modules. It complements the live instruction and tutoring with its learning management system, Tarena Teaching System (TTS). TTS has over five core functions, featuring course content, self-assessment exams, student and teaching staff interaction tools, student management tools and an online student community. In addition, the Company offers Tongcheng and Tongmei featuring IT training courses and non-IT training courses.

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