Long/short equity

More Trouble Ahead For TAL

Update to TAL short thesis Key points this article: Management commentary on recent earnings call confirms my view. $2.52 EPS (My estimate) for 2014 -- 37% below consensus and less than the dividend. Believe TAL needs to issue equity to avoid bigger problems in 2015 (such as cutting the dividend and/or breaching covenants). Reiterate $18/share price target (57% decline) based on replacement value. Recap: On January 6, 2014 I wrote "Trouble Ahead for TAL" and described the problems I foresaw for TAL International in 2014. I focused on revenue headwinds from leases set to re-strike lower, depreciation and gain-on-sale headwinds resulting from TAL's accounting changes, and the risk of rising interest rates. TAL reported earnings on February 12, ...
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