Breaking Down Mexco Energy Corporation (MXC) Financial Health: Key Insights for Investors

You're looking at Mexco Energy Corporation (MXC) and wondering if their recent momentum can hold up against the volatile energy market, and honestly, that's the right question to ask right now. The company closed out its 2025 fiscal year with a strong tailwind, reporting net income of $1,712,368, which was a solid 27% jump over the prior year, on operating revenues that climbed 11% to hit $7,358,066. That growth was largely driven by production volume increases, but here's the rub: the near-term picture, as shown in the recent Q2 2026 results, reveals a significant headwind where a 17% decline in average oil prices is already offsetting those volume gains. So, while the 2025 numbers are defintely impressive, the real story for investors is whether their planned $1.0 million investment to participate in drilling 47 new wells in fiscal year 2026 can generate enough production to outrun the current price pressure.

Revenue Analysis

You want to know where Mexco Energy Corporation (MXC) is actually making its money, and the simple answer is oil. For the fiscal year ending March 31, 2025, the company delivered operating revenues of $7,358,066. This represented an 11% increase year-over-year from fiscal 2024, a solid, if not spectacular, growth rate in a volatile energy market.

This revenue growth wasn't driven by a price surge; in fact, the average sale prices for both oil and natural gas were lower than the prior year. The real engine was an increase in overall oil and natural gas production volumes. This tells me the company is executing on its drilling and acquisition strategy, which is defintely the right move when commodity prices are choppy.

Here's the quick math on where the revenue came from and what drove it:

• Primary Revenue Sources: Oil and Natural Gas sales.
• Oil Dominance: Oil contributed approximately 86% of the total oil and gas sales for the year.
• Royalty Stability: A significant 31% of the total operating revenues came from royalty interests, which is a key, low-cost revenue stream.

The reliance on oil is a clear strategic choice. While the average realized price for oil was a healthy $73.54 per barrel, the natural gas side faced a major headwind. The average realized price for gas was only $1.70 per thousand cubic feet. This low price is primarily due to limited pipeline capacities in the Permian Basin, where much of MXC's activity is focused. That infrastructure bottleneck is a near-term risk you need to keep an eye on.

To break down the segment contributions, it's not just about the product (oil vs. gas), but the business model (working interest vs. royalty interest). The royalty revenue is essentially free cash flow, as it's income generated without the associated operational costs. This Breaking Down Mexco Energy Corporation (MXC) Financial Health: Key Insights for Investors analysis shows that having nearly a third of your revenue insulated from direct operational expenses provides a strong, stable base.

What this estimate hides is the potential for a massive natural gas rebound if pipeline capacity opens up, or a sharp drop if oil prices fall significantly. For now, the revenue mix is heavily skewed toward the profitable oil side, successfully offsetting the weakness in natural gas.

The key action for you: Track the oil-to-gas revenue mix moving forward. If the oil percentage starts to dip without a corresponding jump in realized natural gas prices, the overall revenue quality will suffer.

Profitability Metrics

You want to know if Mexco Energy Corporation (MXC) is a lean, mean profit machine, and the short answer is: relative to its peers, absolutely. For the fiscal year ended March 31, 2025, the company delivered a net income of $1,712,368 on operating revenues of $7,358,066, which translates to a powerful 23.27% Net Profit Margin. That's a clear signal of strong financial health in the energy sector.

Here's the quick math on their core profitability ratios (margins) for the 2025 fiscal year, which are the clearest indicators of how efficiently they turn revenue into profit:

• Gross Profit Margin: 78.19%
• Operating Profit Margin: 26.50%
• Net Profit Margin: 23.27%

Margin Analysis: MXC vs. Industry

When you look at these numbers against the broader Oil & Gas Exploration and Production (E&P) industry, Mexco Energy Corporation's operational efficiency really stands out. The industry average margins for the trailing twelve months (TTM) leading up to late 2025 show a much tighter environment, which makes MXC's performance defintely noteworthy.

The massive spread in Gross Profit Margin (the profit left after Cost of Revenue) is a key indicator. MXC's 78.19% Gross Margin, compared to the industry's 51.51%, suggests superior cost management in production or a higher proportion of royalty revenue, which is typically free of operating costs. In fact, approximately 31% of MXC's 2025 operating revenues came from royalties, which is a high-margin revenue stream.

Operational Efficiency and Profitability Trends

The trend in profitability for Mexco Energy Corporation is positive, but the operating margin tells an important story about cost control. Net Income increased by 27% from fiscal year 2024's $1,344,952 to 2025's $1,712,368. That's a strong jump, but let's look closer at the operational level:

• Gross Margin is up: It rose from 76.88% in FY 2024 to 78.19% in FY 2025, signaling better control over direct production costs or the favorable mix of production/royalty revenue continued to improve.
• Operating Margin is slightly down: The Operating Profit Margin actually dipped from 27.78% in FY 2024 to 26.50% in FY 2025. This suggests that while Gross Profit improved, the company's operating expenses (like Sales, General, and Administrative or other operating items) grew faster than revenue.

Here's the takeaway: The company is excellent at generating profit from its core product sales and royalty interests, but you need to keep an eye on the growth of overhead costs, which slightly compressed the operating margin in 2025. Still, any E&P company posting a 23% Net Profit Margin is executing well. You can dive deeper into the drivers behind this performance by Exploring Mexco Energy Corporation (MXC) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

If you're looking at Mexco Energy Corporation (MXC), the most powerful takeaway on their balance sheet is this: they are essentially debt-free. For the fiscal year ending March 31, 2025, the company reported having zero outstanding debt, both long-term and short-term. This capital structure is extremely conservative for the energy sector, and it tells you a lot about their financial discipline.

In an industry that is notoriously capital-intensive (meaning they need a ton of money to find and pull oil and gas out of the ground), this lack of leverage is a significant risk mitigator. The company's total shareholders' equity stood at a strong $18,712,000 in fiscal 2025, which means they are funding their operations almost entirely through retained earnings and shareholder capital.

Here's the quick math on what that means for financial leverage (the use of borrowed money to finance assets):

• Debt-to-Equity Ratio: 0.00

To be fair, the industry standard for Oil and Gas Exploration and Production (E&P) companies is typically a Debt-to-Equity ratio of around 0.50 as of early 2025, with the broader energy industry ranging from 0.29 to 2.42. Mexco Energy Corporation's ratio is a massive outlier, which is defintely a good thing when oil prices get volatile.

Financing Growth: Cash Over Credit

Mexco Energy Corporation's financing strategy is simple: use cash and equity, not debt. They have no recent debt issuances, credit ratings, or refinancing activity to report because they simply aren't borrowing money. This is a huge advantage in a rising interest rate environment, as they have no interest expense dragging down net income.

For instance, in fiscal 2025, the company funded its participation in drilling 35 horizontal wells at a cost of $1.1 million and acquired royalty and mineral interests for an additional $2.0 million, all while maintaining a cash position of approximately $1,750,000. They are using their cash flow and equity to grow, not a credit line.

What this estimate hides is that while they have no traditional debt, they do have current liabilities (like accounts payable) which totaled approximately $551,000 in fiscal 2025. But those are operating liabilities, not bank debt. Anyway, the key takeaway is a rock-solid balance sheet.

This capital structure gives them immense flexibility to weather commodity price downturns or to quickly jump on new acquisition opportunities without needing to secure financing. If you want to dig deeper into who is buying into this low-leverage, cash-rich strategy, you should check out Exploring Mexco Energy Corporation (MXC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

Mexco Energy Corporation (MXC) exhibits an exceptionally strong liquidity position, driven by minimal debt and high coverage ratios. The company's ability to meet its near-term obligations is not a concern; in fact, its liquidity is a key financial strength, giving it flexibility for capital expenditures.

Current and Quick Ratios Signal Robust Health

The company's liquidity ratios for the fiscal year ended March 31, 2025, are excellent. Liquidity ratios measure your ability to pay off short-term debt (current liabilities) with short-term assets (current assets). A ratio above 1.0 is generally good; Mexco Energy Corporation is far beyond that threshold.

• Current Ratio (FY 2025): 5.48
• Quick Ratio (FY 2025): 5.33

Here's the quick math: a Current Ratio of 5.48 means Mexco Energy Corporation has $5.48 in current assets for every dollar of current liabilities. The Quick Ratio (acid-test ratio), which excludes inventory, is nearly identical at 5.33. This minimal difference confirms that inventory-which can be hard to liquidate quickly-is not a significant component of their short-term funding, which is defintely a positive for an exploration and production (E&P) company.

Working Capital Trends and Cash Position

The high Current Ratio translates directly into a very strong, positive working capital position (Current Assets minus Current Liabilities). This trend of asset-heavy liquidity is a consistent theme for Mexco Energy Corporation. It's a classic sign of a company that is self-funding its operations and growth, rather than relying on external credit lines for day-to-day needs.

The company's cash on hand as of the fiscal year-end March 31, 2025, was approximately $2.2 million. Plus, a critical solvency point: Mexco Energy Corporation reported no outstanding indebtedness on its bank line of credit. That's a huge cushion, especially in the volatile energy sector. The high liquidity is a clear strength.

Cash Flow Statements Overview

Analyzing the cash flow statement provides context on how that strong liquidity is generated and deployed. For the fiscal year 2025, the picture is one of strong internal generation supporting an aggressive capital program.

The cash flow dynamics show that operating activities are generating enough cash to fund substantial investment in future production, like the $1.1 million spent on drilling 35 horizontal wells. This is a healthy cycle: cash from operations is immediately reinvested into the asset base. This is exactly what you want to see in a growth-focused E&P company. For a deeper dive into who is betting on this strategy, check out Exploring Mexco Energy Corporation (MXC) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Mexco Energy Corporation (MXC) is a buy, a hold, or a sell right now. The quick answer is that based on core valuation multiples and the latest analyst view, Mexco Energy Corporation appears reasonably priced, leaning toward undervalued on a price-to-book basis.

Its Price-to-Earnings (P/E) ratio of 11.85 is below the broader S&P 500 average, suggesting you're not paying a premium for its $1,710,000 in fiscal year 2025 net income. Plus, the Price-to-Book (P/B) ratio sits just above 1.0, which is defintely a value signal in the energy sector.

Is Mexco Energy Corporation Overvalued or Undervalued?

When we look at the core valuation metrics, the picture is one of a company trading close to its intrinsic value, but with some room for upside if the analyst consensus holds true. The low Enterprise Value-to-EBITDA (EV/EBITDA) ratio is particularly compelling, showing the market isn't overpaying for the company's operating cash flow.

Here's the quick math on the key valuation ratios based on recent 2025 data:

Stock Price Trends and Analyst Consensus

The stock has seen significant volatility over the last 12 months, trading in a wide range between its 52-week low of $5.89 and its high of $16.00. As of November 17, 2025, the stock closed at $9.22, sitting near the midpoint of that range. This tells you energy stocks are always a volatility trade, not a sleep-well-at-night investment.

The latest analyst consensus on Mexco Energy Corporation stock is a Buy rating, with a price target set at $10.50. This target implies an upside of approximately 13.8% from the recent $9.22 closing price. TipRanks' AI Analyst also rates the stock as an Outperform. What this estimate hides, however, is that some technical indicators still hold a negative evaluation, signaling a potential for short-term weakness.

Dividend and Payout Health

Mexco Energy Corporation does pay a dividend, which is a nice bonus in a growth-focused sector. The company's annual dividend is $0.10 per share, giving it a forward dividend yield of approximately 1.11%.

• Annual Dividend: $0.10 per share
• Forward Dividend Yield: Approximately 1.11%
• Payout Ratio: 12.63%

The low payout ratio of 12.63% is a strong positive signal. It means the company is only using a small fraction of its earnings to cover the dividend, leaving the vast majority for reinvestment in new drilling and acquisitions-like the planned $1.0 million expenditure on 47 wells for the fiscal year ending March 31, 2026. For a deeper dive into the operational side, you can check out the full post: Breaking Down Mexco Energy Corporation (MXC) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Mexco Energy Corporation (MXC) and seeing a profitable independent producer, which is true-they reported net income of $1,712,368 for the fiscal year ended March 31, 2025. But, honestly, in the oil and gas game, profitability is always a tightrope walk. You need to map the risks before you commit capital.

The primary external risk is, and always will be, the volatility of oil and gas prices. This isn't just a theoretical worry; it's an active headwind right now. For the six months ending September 30, 2025, operating revenues of $3,548,919 were adversely impacted by a 17% decline in average oil prices, even though production volumes were up. Oil makes up the bulk of their revenue, contributing 76% in the first half of fiscal 2026, so a price drop hits hard.

Internally, the biggest challenge is the constant need to develop and replace reserves. As a smaller player, Mexco Energy Corporation faces intense industry competition from both larger, established companies and smaller, more agile competitors, which pressures their margins and ability to secure new acreage. Plus, the regulatory environment is always shifting, adding a layer of unpredictable cost and compliance risk.

Operational and strategic risks are clearly highlighted in their recent filings. These are the things you can measure and track:

• Production Variance: The risk that actual production falls short of expectations.
• Exploration Risk: The inherent uncertainty that drilling new wells won't yield commercial quantities of hydrocarbons.
• Infrastructure Bottlenecks: Low natural gas prices in fiscal 2025 were specifically attributed to limited pipeline capacities in the Permian Basin, where much of their activity is focused.

To be fair, Mexco Energy Corporation is taking clear steps to mitigate these risks by actively investing in new development. In fiscal year 2025, they participated in the drilling of 35 horizontal wells at a cost of approximately $1,100,000. For the current fiscal year ending March 31, 2026, they plan to participate in the drilling and completion of 47 wells at an estimated aggregate cost of approximately $1.0 million. This aggressive, though modest, capital expenditure plan is their strategic defense against reserve depletion. They're also diversifying their income stream by expending approximately $450,000 on royalty and mineral interest acquisitions in the first half of fiscal 2026. You can get a sense of their long-term focus by reading their Mission Statement, Vision, & Core Values of Mexco Energy Corporation (MXC).

Here's the quick math on their development spending versus recent revenue:

They're spending roughly 13%-15% of last year's revenue on drilling to replace reserves, which is a defintely necessary, ongoing cost of doing business in the exploration and production (E&P) space.

Growth Opportunities

You're looking for a clear path to growth for Mexco Energy Corporation (MXC), and the numbers from the fiscal year (FY) ending March 31, 2025, give us a solid map. The direct takeaway is that their aggressive capital allocation to drilling and royalty acquisitions is translating directly into higher output and a stronger balance sheet, despite commodity price volatility.

The company delivered operating revenues of $7,358,066 for FY 2025, an 11% increase over the prior year, and net income jumped by 27% to $1,712,368, or $0.81 per diluted share. This growth is defintely driven by a clear, repeatable strategy, not just a lucky price spike.

Key Growth Drivers: Production and Royalty Income

The primary engine for Mexco Energy Corporation's FY 2025 performance was a significant increase in oil and natural gas production volumes. Their strategic focus on oil has proven particularly beneficial, as oil contributed approximately 87% of their operating revenues in the first half of FY 2025. This focus helps them manage the pressure from historically low natural gas prices, which are a persistent issue due to pipeline capacity constraints in the Permian Basin.

Also, a crucial, high-margin driver is the royalty interest portfolio. About 31% of the FY 2025 operating revenues came from royalties, meaning that revenue stream is essentially free of operational costs. That's a powerful financial advantage.

• Increase production volumes.
• Maintain oil-heavy revenue mix.
• Expand high-margin royalty interests.

Near-Term Strategic Investments

The company's near-term strategy for FY 2026 shows a commitment to this production-led growth. They are continuing to deploy capital into high-impact drilling and strategic acquisitions, which are the clearest indicators of future revenue increases.

Here's the quick math on their planned capital deployment for the current fiscal year:

What this estimate hides is the long-term compounding effect of these royalty acquisitions. Spending $450,000 on new royalty interests in the first half of FY 2026 adds a permanent, high-margin revenue stream to the balance sheet, which is a key part of their growth plan.

Competitive Advantages and Financial Strength

Mexco Energy Corporation's biggest competitive advantage isn't just what they own, but how they fund it. They maintain a remarkably strong liquidity position, reporting approximately $2.2 million cash on hand as of the end of FY 2025, and importantly, they carry no outstanding indebtedness on their credit line. This financial stability allows them to be opportunistic with acquisitions and drilling without being beholden to capital markets or high interest rates.

Their geographic focus is also a major advantage. The company specializes in the Permian Basin, including the lucrative Delaware Basin in New Mexico and Texas, where 29 of the 35 wells drilled in FY 2025 were located. This concentration in a world-class basin provides better economies of scale and access to premium pricing. For a deeper dive into the valuation and risk profile, you can read the full post: Breaking Down Mexco Energy Corporation (MXC) Financial Health: Key Insights for Investors.