REX AMERICAN RESOURCES CORPORATION (REX): what the price requires

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/REX

Headline

Field	Value
Ticker	REX
Company	REX AMERICAN RESOURCES CORPORATION
Current price	$47.74/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Implied growth	4.8%
Multiple paid	14x operating income

Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.8pp.

How unusual the bet is: within-range (limited comparison data)

Reference	Value
cohort percentile (of 76 peers)	26
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based value, while earnings-power/relative-multiple land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.21x	4	expensive
Earnings	2.27x	4	expensive
Relative	1.55x	5	expensive
Growth	1.47x	3	expensive

Families that justify the price: Asset Families that call it expensive: Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=16)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$21.18	2.25x	yes	FCF base $0.0B, growth 2% (input: historical growth), terminal g 1.5%, WACC 9.2%, 5yr projection
DCF Exit Multiple	Growth	$39.64	1.20x	yes	Exit EV/EBITDA: 57.5x / 59.5x / 61.5x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$30.89	1.55x	yes	P/E 14x (static sector reference · 2026-04), scenarios: 11.9x / 14.0x / 16.1x (bear / base = reference held flat / bull), EV/EBITDA 17.6x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$34.63	1.38x	yes	BV/sh $19.00, ROE (TTM) 16.9%, ke 9.3%
Two-Stage Excess Return	Asset	$46.14	1.03x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$32.44	1.47x	yes	Rev $0.6B, growth 2% (input: historical growth; tapered), Terminal P/S: 2.1x / 2.4x / 2.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$81.72	0.58x	yes	EPS $2.33, growth 35% (input: historical EPS growth), PEG=0.43 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$46.49	1.03x	yes	BV $19.00 + 5yr PV of (ROE (TTM) 16.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$31.60	1.51x	yes	√(22.5 × EPS $2.33 × BVPS $19.00) — Graham's conservative floor
EV/EBITDA Relative	Relative	$9.06	5.27x	yes	EBITDA $0.02B × sector EV/EBITDA 8.0x
FCF Yield	Earnings	$18.09	2.64x	yes	FCF $46.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$15.81	3.02x	yes	SBC-adj FCF $0.04B (FCF $0.05B − SBC $0.01B) capitalized at Kₑ
Ben Graham Formula	Earnings	$75.34	0.63x	yes	EPS $2.33 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$29.38	1.62x	yes	Revenue $0.65B × sector P/S 1.5x
PEG Fair Value	Relative	$87.56	0.55x	yes	EPS $2.33 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$25.24	1.89x	yes	EPS $2.33 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$361.2m
Net debt / NOPAT (after-tax)	-4.14x (net cash)
Net debt / operating income (pre-tax)	-3.27x (net cash)
Share count CAGR (buyback)	-1.7%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

REX American Resources is a debt-free ethanol producer trading at $43.90, a mature commodity processor sitting on roughly $361 million of net cash against about $3 million of gross debt. The cash is more than a third of the market value, which changes how the rest of the business should be read.

The near-term result was strong: fiscal first-quarter 2026 diluted EPS more than doubled to $0.56, with net income of $18.5 million on a 17 percent operating margin, even as revenue dipped slightly on lower ethanol pricing.

The optionality is carbon capture. REX is spending $220 million to $230 million from cash to expand its One Earth ethanol plant and add carbon sequestration, which, if permitted, would unlock federal 45Q and 45Z tax credits. The bet is turning a cyclical commodity plant into a lower-carbon, credit-advantaged one.

Bull Case

Read REX as a mature commodity processor that happens to have a pristine balance sheet and a real option attached, and the stage tells you how to weigh it. Ethanol production is a cyclical, low-multiple business, so the headline is not the trailing earnings; it is that REX carries roughly $361 million of net cash against almost no debt, a position that is more than a third of the company's market value. That cash is what separates REX from leveraged commodity peers: it funds growth and buybacks without dilution or borrowing, and it provides a hard floor under the asset-based valuation. The price is supported by asset-based value precisely because the cash and plant value are tangible and real.

The operating business is performing well within the cycle. Fiscal first-quarter 2026 net income attributable to REX more than doubled to $18.5 million, with diluted EPS of $0.56 versus $0.26 a year earlier, even though revenue dipped to $156.5 million on softer ethanol pricing. The company books production tax credit income (about $7.5 million in the quarter) and runs a disciplined hedging approach, matching ethanol sales contracts with corn purchase contracts to lock in an adequate gross margin when conditions allow (FY2025 10-K, accession 0000930413-25-001069). A 17 percent operating margin in a commodity business is the sign of a well-run, low-cost operator.

The upside is the transformation. REX is investing $220 million to $230 million from available cash to expand ethanol production at its One Earth facility, nearing completion and expected fully operational in fiscal 2026, and to add carbon capture and sequestration. If the Class VI injection well and pipeline are permitted, the project positions the plants to earn federal 45Q and extended 45Z tax credits tied to carbon-intensity reductions, which would meaningfully raise the structural earning power of a plant that already runs profitably. The board authorized an additional 1.5 million share buyback, signaling management views the stock as undervalued.

Bear Case

The variable that swings REX hardest is the ethanol crush margin, the spread between ethanol prices and corn costs, and that spread is set by markets entirely outside the company's control. REX's profitability is directly tied to corn prices, energy and crude prices, export demand for ethanol and distillers grains, and the broader renewable-fuel policy environment (FY2025 10-K, accession 0000930413-25-001069). The first quarter already showed revenue slipping on lower ethanol pricing. A bad crush-margin year, driven by a poor harvest lifting corn, weak gasoline demand pressuring ethanol, or a trade dispute cutting exports, can compress that 17 percent margin sharply, and the price does not fully discount how cyclical this business is.

The second risk sits squarely on regulation, and it is the linchpin of the bull case. The entire carbon-capture thesis depends on permits REX does not yet hold. The Class VI injection well and the carbon-dioxide pipeline both await approval, with REX still working through the U.S. EPA and the Illinois Commerce Commission, and the company cannot even submit its carbon-pipeline application until an Illinois state moratorium expires on July 1, 2026. Permitting for carbon sequestration has been slow industry-wide, and the 45Q and 45Z tax-credit economics that justify the spend assume both successful permitting and stable federal policy. A permit denial, a multi-year delay, or a change to the credit regime would strand a large portion of the $220 million to $230 million capital program.

Third, the valuation already reflects optimism on both the cycle and the transformation. The earnings-power and growth-DCF methods say expensive: the DCF perpetual-growth lands near $21.19, the FCF-yield method near $18.09, and the blended X-ray central estimate sits near $34.12, below the $43.90 price (June 28, 2026). The EV/EBITDA relative method lands near $9, reflecting how the market discounts commodity ethanol cash flows. Stripping out the cash, the operating business is being valued for a recovery and a successful carbon project, neither guaranteed.

Valuation

REX is best valued on its assets and its cash, because it is a debt-free commodity processor where the balance sheet does much of the work. At $43.90 the price is supported by asset-based value while the earnings-power lens says expensive, which the priced-in read characterizes as a value-and-asset-supported name, not a growth bet. The roughly $361 million net-cash position, more than a third of the market value, is the anchor that keeps the asset methods elevated.

The methods split along the cycle. The asset-based lenses land at or above the price: two-stage excess return near $46.14, residual income near $46.49, and the Graham number near $34.60, reflecting tangible plant value plus the cash hoard. The relative and growth lenses are more mixed: relative valuation near $30.89 and the DCF exit-multiple near $36.99, while the EV/EBITDA relative method lands near $9.06, the market's harsh multiple on commodity ethanol EBITDA. The earnings-power and FCF methods land near $18, saying the operating business alone does not justify the price. The blended X-ray central estimate sits near $34.12, below the price, dragged by the commodity-discount methods.

The implied growth embedded in the price is a modest 1.9 percent, low for a company mid-expansion. The honest framing is that the asset and forward methods say REX is reasonably valued to cheap, while the earnings-power methods say the operating business is fully priced, and the gap between them is the cash plus the carbon-capture option. Whether the stock is cheap depends on the ethanol cycle cooperating and the carbon project earning its tax credits; if both go right, the high end of the band is reachable, and if neither does, the cash and plant value near $45 set the floor.

Catalysts

Fiscal first-quarter 2026 results, reported in late May, set a record on the bottom line. Net income attributable to REX more than doubled to $18.5 million, with diluted EPS of $0.56 versus $0.26 a year earlier, on revenue of $156.5 million that dipped slightly on lower ethanol pricing. The company booked $7.5 million of production tax credit income in the quarter.

The defining catalysts are the One Earth expansion and the carbon-capture project. The ethanol production expansion at One Earth is nearing completion and is expected to become fully operational during fiscal 2026. The carbon capture and sequestration project awaits permitting for the Class VI injection well and associated pipeline, with REX engaged with the U.S. EPA and the Illinois Commerce Commission; management expects to submit the carbon-pipeline application shortly after the Illinois state moratorium expires on July 1, 2026. Total investment for the expansion and carbon projects is budgeted at $220 million to $230 million, paid from available cash, and success would position the plants for federal 45Q and 45Z tax credits. The board also authorized an additional 1.5 million share buyback.

Near-term catalysts to watch: the trajectory of ethanol crush margins and corn costs, completion and commissioning of the One Earth ethanol expansion, the July 1 moratorium expiration and the subsequent carbon-pipeline application and Class VI well permitting timeline, any federal policy shifts affecting the 45Q and 45Z credits, and the pace of the buyback given the large cash balance.

Peer Cohorts (Per Segment, With Filing Citations)

Ethanol and by-products (single segment) (reported)

• ANDE (ANDERSONS, INC.)
• (no filing in the citation store)
• ADM (ARCHER-DANIELS-MIDLAND CO)
• (no filing in the citation store)
• INGR (INGREDION INCORPORATED)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.