Breaking Down REX American Resources Corporation (REX) Financial Health: Key Insights for Investors

You're looking at REX American Resources Corporation and trying to cut through the noise of the volatile ethanol market, so let's get straight to the facts: the company's financial health is a classic study in a strong balance sheet defintely offsetting margin pressure. For the fiscal year ending January 31, 2025, the company reported annual revenue of $642.49 million, and while Q2 2025 net income was $7.1 million, the real story is their fortress-like cash position; they ended Q2 2025 with $310.5 million in cash and short-term investments and zero bank debt. That massive cash reserve is what lets them fund the $220-$230 million carbon capture and expansion projects, which is the long-term play, plus they just executed a 2-for-1 stock split in September 2025. We're going to map out exactly what that $310.5 million means for their capital allocation and why analysts are still projecting a full-year EPS of around $2.93, even with a mixed Q3 outlook. This isn't about guessing; it's about the numbers.

Revenue Analysis

You need to know where REX American Resources Corporation (REX) makes its money, especially with the volatility in the energy and agricultural markets. The direct takeaway is this: REX's revenue is almost entirely tied to ethanol production and its co-products, and while the Mission Statement, Vision, & Core Values of REX American Resources Corporation (REX). points to long-term sustainability, the near-term revenue picture is mixed, showing a significant annual drop but a recent quarterly rebound.

For the fiscal year ending January 31, 2025, REX reported annual revenue of $642.49 million. That's a sharp decline, reflecting a year-over-year decrease of -22.91%. This kind of drop is a flashing yellow light; it shows the impact of commodity price swings on a business model centered on ethanol. However, the more recent data tells a slightly different story, with the trailing twelve months (TTM) revenue as of July 31, 2025, stabilizing at $650.01 million, a smaller year-over-year decline of -9.48%. The company is definitely in a cyclical industry.

Primary Revenue Streams and Segment Contribution

REX American Resources Corporation operates primarily in the ethanol production business. Its revenue is generated from the sale of ethanol and two key co-products: dried distiller grains (DDGs), which are used as animal feed, and corn oil. The company's interests are concentrated in six ethanol production facilities, with two-One Earth Energy, LLC and NuGen Energy, LLC-being consolidated for financial reporting.

Here's the quick math on the product mix from the second quarter of fiscal 2025 (Q2 '25), which reported net sales and revenue of $158.6 million:

• Ethanol sales volume reached 70.6 million gallons.
• The average ethanol selling price was $1.75 per gallon.
• Dried distiller grain sales volume was approximately 148,000 tons.
• The average DDG price was $143.63 per ton.

The vast majority of the company's consolidated revenue comes from the Ethanol segment, making it the single most important driver for your investment thesis. You can't ignore the co-products, though, as they are crucial for margin stability.

Recent Revenue Shifts and Trends

Looking at the quarter-to-quarter performance in fiscal 2025 gives us a clearer picture of the near-term trend. Q2 2025 net sales and revenue of $158.6 million actually represented a 7.0% increase over the same quarter in 2024. This rebound was driven by higher volumes of ethanol sales.

To be fair, the Q2 revenue increase came despite lower pricing for both ethanol and dried distiller grains compared to Q2 2024, so volume was the key lever. A significant change that helped offset some of the pricing pressure was the performance of corn oil. Sales dollars from corn oil saw a 46% increase year-over-year in Q2 2025, driven by a 14% increase in volume and a 26% increase in price. This product diversification, even within the ethanol process, is a defintely positive sign for managing commodity risk.

Here is a summary of the quarterly revenue performance:

Your next step should be to monitor the Q3 2025 results, expected in December, as management anticipates this quarter to outperform Q2 2025, supported by favorable corn supply and rising ethanol exports.

Profitability Metrics

You want to know if REX American Resources Corporation (REX) is making money and how efficiently they do it. The direct takeaway is that REX maintains solid profitability, with a Trailing Twelve Months (TTM) Gross Profit Margin of over 13% as of late fiscal year 2025, but its net profitability is under pressure, as seen by the sequential decline in Net Income from the first to the second quarter.

For the TTM period ending in the second half of fiscal year 2025, REX's core profitability ratios show a healthy, albeit tightening, picture. Here's the quick math on the TTM margins, which give you a clearer annual view:

• Gross Profit Margin: 13.22%
• Operating Profit Margin: 9.10%
• Net Profit Margin: 7.91%

A Gross Profit Margin above 13% is strong, but the drop-off to the Operating and Net Margins tells you where the costs hit. Honestly, the gap between Gross and Operating Margin is only 4.12 percentage points, which suggests REX is managing its selling, general, and administrative expenses (SG&A) well. The real difference maker is the cost of goods sold (COGS), which is the biggest variable in the ethanol business.

Recent Profitability Trends: Q1 vs. Q2 2025

The near-term trend shows margin compression, which is a key risk you need to map out. While REX's consolidated net sales and revenue remained stable, moving from $158.3 million in Fiscal Q1 2025 to $158.6 million in Fiscal Q2 2025, the profit figures dipped. This is a clear sign that input costs or market pricing for co-products are squeezing the bottom line. You can see this pressure clearly in the quarterly figures:

The Gross Profit stayed flat at $14.3 million across both quarters, but Net Income attributable to REX shareholders fell by $1.6 million. This decline in net profitability, from a 5.50% Net Margin to 4.48%, is a direct result of lower interest and other income, which dropped from $4.2 million to $3.1 million. This means REX's core ethanol production margins were stable, but its non-operating income took a hit. You need to watch that non-operating segment.

Operational Efficiency and Industry Comparison

REX's operational efficiency is demonstrated by its stable gross margin despite volatile commodity markets. The company's primary business is ethanol production, and the entire industry is highly sensitive to corn prices and the price of co-products like distiller grains. For the broader U.S. ethanol industry in 2025, profit margins have been tightening, with the estimated operating margins for the average Iowa plant holding just above the breakeven mark as of November 2025.

While REX's TTM Net Margin of 7.91% is a strong showing, the industry is struggling with margin pressure due to high feedstock costs and fluctuating ethanol prices. For context, the average net profit for a representative ethanol plant in 2024 was only $0.08 per gallon, a regression toward the mean after a period of high profits. REX's ability to maintain a positive net income and a strong cash position-they had $310.5 million in cash, cash equivalents, and short-term investments and no bank debt as of July 31, 2025-positions it as a financially defintely resilient player in a low-margin environment. The company's strategic focus on carbon capture and sequestration projects, like the one at One Earth Energy, is a calculated move to secure future revenue streams and potentially higher margins through tax credits and premium product pricing. You can read more about their long-term strategy here: Mission Statement, Vision, & Core Values of REX American Resources Corporation (REX).

The key action item for you is to monitor the Q3 2025 earnings release for any rebound in non-operating income and a stabilization of the Net Margin.

Debt vs. Equity Structure

You're looking at REX American Resources Corporation (REX) and wondering how they fund their operations-it's a question of risk and stability. The direct takeaway is that REX American Resources Corporation operates with an exceptionally low-leverage model, relying almost entirely on equity and retained earnings, which is a massive differentiator in the capital-intensive ethanol sector.

As of the fiscal year 2025, REX American Resources Corporation's balance sheet shows a deliberate preference for equity funding over debt. They reported total debt of only about $26.19 million in the quarter ending April 2025, which is a tiny figure for a company of this size. Critically, management has repeatedly stated they have no bank debt as of July 31, 2025, a rare position for a manufacturing-heavy business. This debt is primarily comprised of non-bank long-term liabilities, such as capital leases and other obligations, which stood at $25.963 million as of January 31, 2025.

Here's the quick math on their leverage profile:

• REX American Resources Corporation Debt-to-Equity (D/E) Ratio: Approximately 0.04 (October 2025 data).
• Industry Average D/E Ratio (Agricultural Inputs/Ethanol): Roughly 0.75 (November 2025).

A D/E ratio of 0.04 means REX American Resources Corporation is funding less than 5 cents of every dollar with debt, while the average peer is using 75 cents. This conservative approach means lower interest expense and a much stronger buffer against commodity price swings, which is defintely a risk in the ethanol market. The company's credit rating reflects this stability, with Weiss Ratings reaffirming a 'Hold (C+)' rating in October 2025, suggesting a neutral but financially sound outlook.

The company's financing strategy is clear: fund growth internally. With Shareholders' Equity at $643.60 million for the fiscal year ending January 31, 2025, REX American Resources Corporation has the capital to deploy without external borrowing. This equity-first model is evident in their recent capital allocation actions:

What this estimate hides is that REX American Resources Corporation's low debt tolerance limits its ability to use financial leverage (borrowing to boost returns) like some competitors. Still, in an industry facing regulatory shifts, like the potential impact of the One Big Beautiful Bill Act on tax credits, having a fortress balance sheet is a powerful defense. The strategy is simple: own your assets, own your growth, and avoid the debt trap. For a deeper dive into the company's overall financial health, check out Breaking Down REX American Resources Corporation (REX) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if REX American Resources Corporation (REX) can cover its short-term bills, and the answer is a resounding yes. The company's liquidity position, as of the end of the second fiscal quarter of 2025 (July 31, 2025), is exceptionally strong, backed by a massive cash cushion and virtually no bank debt. This financial strength gives REX substantial flexibility for its capital expenditure plans, like the ethanol expansion and carbon capture project.

A quick look at the core liquidity ratios tells the story. The Current Ratio, which measures current assets against current liabilities, sits at an impressive 10.53. This means REX has over ten dollars in short-term assets for every one dollar of short-term debt. Even the Quick Ratio (Acid-Test Ratio), which is a more conservative measure that strips out inventory, is at a robust 9.68. Most analysts look for a ratio of 1.0 or higher; REX is a clear outlier in the best way possible. This is defintely a strength.

Here's the quick math on their liquid position as of July 31, 2025:

• Current Ratio: 10.53 (Current Assets of $390.516 million / Current Liabilities of $37.085 million).
• Quick Ratio: 9.68 (Current Assets minus Inventory / Current Liabilities).
• Working Capital: $353.4 million.

This high working capital (Current Assets minus Current Liabilities) of $353.4 million shows a significant buffer. The company reported a total of $310.5 million in cash, cash equivalents, and short-term investments available as of the end of Q2 2025, with no bank debt on the books. This cash hoard is the primary driver of the high liquidity ratios and a key strength for the company.

The cash flow statement for the first six months of fiscal year 2025 also paints a clear picture of internal funding power and strategic investment. Net cash provided by operating activities was a positive $20.0 million. This is the cash generated from the core ethanol business, and it's the engine funding the company's future.

The cash flows from other activities reflect REX's forward-looking strategy:

• Investing Cash Flow (Trailing Twelve Months, TTM): -$39.1 million. This negative number is a good sign, primarily driven by capital expenditures for the One Earth carbon capture and sequestration project and the related ethanol production capacity expansion, budgeted at $220 million to $230 million. They are actively investing in future growth.
• Financing Cash Flow (TTM): Key activity included the repurchase of common stock totaling approximately $48.12 million (TTM). This signals a commitment to returning capital to shareholders, a strong vote of confidence from management.

What this estimate hides is the potential for volatility in the ethanol and distiller grain markets, which can impact operating cash flow, but the sheer size of the cash and equivalents balance provides a massive buffer. The liquidity is not a concern; the focus should be on the return on investment from the aggressive capital spending. You can read more about their long-term strategy here: Mission Statement, Vision, & Core Values of REX American Resources Corporation (REX).

Valuation Analysis

You need to know if REX American Resources Corporation (REX) is trading at a fair price right now, and the short answer is that the market is pricing in significant future growth, pushing the stock toward the higher end of its historical valuation range. When we look at the core multiples based on trailing twelve months (TTM) data ending July 2025, the picture suggests that while not wildly overvalued, it's defintely not a bargain.

Here's the quick math on the key valuation metrics:

• Price-to-Earnings (P/E) Ratio: The TTM P/E sits at approximately 21.72. This is higher than many industrial peers, suggesting investors expect earnings to grow substantially from the TTM earnings per share (EPS) of $1.475.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple, which accounts for debt and cash, is currently around 10.75. To be fair, this is a more reasonable figure, sitting below the industry median of 14.04 for the Chemicals sector, which REX is often grouped with.
• Price-to-Book (P/B) Ratio: The latest P/B is approximately 1.5x. This is a healthy sign for a company with significant tangible assets like ethanol plants, meaning the stock trades at only 1.5 times its book value, which is not excessive.

Stock Performance and Dividend Policy

The stock's recent performance has been strong, but that also creates a near-term risk of a pullback. Over the last 12 months leading up to November 2025, REX American Resources Corporation's stock price has climbed by a notable 43.95%. This run-up has pushed the price, which closed recently at $32.02, near its 52-week high of $33.97, a far cry from its 52-week low of $16.73.

The company's dividend policy is simple: they don't pay a regular cash dividend, so the dividend yield is 0.00%. Instead of regular payouts, REX American Resources Corporation focuses on share repurchases, like the strategic buyback of approximately 822,000 shares for $32.7 million in the first quarter of fiscal year 2025, and the 2-for-1 stock split executed in September 2025. This strategy signals management's confidence that reinvesting cash into the business or reducing share count is the best way to maximize shareholder returns.

Analyst Consensus and Price Target

Wall Street is generally optimistic, but the price targets show a split view. The overall analyst consensus is a Buy rating, based on the ratings of five analysts. This breaks down to one Hold, three Buy, and one Strong Buy rating. The average 12-month price target is a significant $51.00, suggesting a substantial upside from the current price. What this estimate hides, however, is the range of targets, which indicates some uncertainty about the speed of their carbon capture and ethanol expansion projects.

For a deeper dive into the institutional money driving these trends, you should check out Exploring REX American Resources Corporation (REX) Investor Profile: Who's Buying and Why?

Here is a summary of the valuation metrics and analyst outlook:

Your action now is to model a scenario where the 2026 EPS forecast of $1.64 materializes, and see if the resulting forward P/E justifies the current price. Finance: draft a sensitivity analysis on the $51.00 target based on ethanol and carbon credit price fluctuations by end of next week.

Risk Factors

You're looking for the clear downside, and with REX American Resources Corporation (REX), the core risks are a classic mix of volatile commodity markets and regulatory headwinds that directly hit the bottom line. While the company has a rock-solid balance sheet, its profitability is still keenly exposed to external pricing that management can't fully control.

External Risks: Commodity Pricing and Regulation

The biggest near-term risk for REX is the relentless volatility in the ethanol and co-product markets. The company's Q2 2025 results showed this clearly: while consolidated ethanol sales volumes actually increased to 70.6 million gallons from 65.1 million gallons in Q2 2024, the average selling price for ethanol dropped to $1.75 per gallon from $1.79 in the prior year. This price dip, plus lower prices for co-products like dried distiller grain, is why gross profit fell to $14.3 million in Q2 2025, down from $19.8 million in Q2 2024. That's a significant margin compression.

Also, don't forget the regulatory environment. REX's long-term value hinges on its carbon sequestration project, which is designed to capture lucrative 45Z and 45Q tax credits (Internal Revenue Code sections for clean energy). The risk here is two-fold:

• EPA Permit Delays: The final approval for the EPA's Class VI injection well permit is a critical bottleneck.
• State Moratoriums: An ongoing CO₂ pipeline moratorium in Illinois has tested patience and could delay the project's go-live date.

Operational and Strategic Challenges

On the operational front, REX has been dealing with a revenue shortfall and project execution risk. Even with an EPS beat of $0.43 in Q2 2025, revenue of $158.56 million missed the anticipated $165 million-a 3.9% miss. This indicates sales challenges persist despite efficient cost management. Logistics cost pressures, especially for export-driven revenue, remain a key concern that can erode margins.

Strategically, the ethanol expansion project is a massive undertaking with a combined budget of $220-$230 million. While the project is on schedule for completion in 2026, any further delays or cost overruns would directly impact future cash flow and shareholder value. Execution risk is real when you're building big infrastructure.

Mitigation and Financial Resilience

To be fair, REX has built a powerful financial buffer to weather these risks. The company operates with a fortress balance sheet, reporting $310.5 million in cash, cash equivalents, and short-term investments as of July 31, 2025, and crucially, no bank debt. This strong liquidity gives them flexibility to manage commodity price swings and fund the capital-intensive carbon capture and ethanol expansion projects without external financing pressure. That's defintely a huge advantage over most competitors.

Management's commitment to shareholder value is also clear through its ongoing share repurchase program, which has retired over 1.82 million shares since 2021, helping to boost earnings per share even when net income dips. Their strategy is to focus on operational efficiency now while positioning for the future value of low-carbon fuels, as discussed in the broader analysis on Breaking Down REX American Resources Corporation (REX) Financial Health: Key Insights for Investors. The success of this long-term strategy, however, hinges on navigating those regulatory hurdles.

Growth Opportunities

You're looking past the current quarter's noise, and honestly, that's the right move for a company like REX American Resources Corporation (REX). The near-term focus is on a major capital pivot, so you need to map out the payoff. The core takeaway is this: REX is transforming from a standard ethanol producer into a premium, low-carbon fuel supplier, and that shift is the primary growth driver for the next two fiscal years.

The company's strategy hinges on a massive investment in carbon capture and sequestration (CCS). This isn't just talk; REX has budgeted between $220 million and $230 million for these projects, with construction on the capture and compression infrastructure already completed in late 2024. The real bottleneck is the Environmental Protection Agency's (EPA) Class VI injection well permit, which management anticipates by October 2025 at the latest. Once operational, this system could reduce the Gibson City plant's CO₂ emissions by 90%, which is a game-changer.

This decarbonization effort is their clearest competitive advantage. It positions REX to sell 'ultra-low-carbon ethanol' at a premium into high-value regulatory markets, specifically California's Low Carbon Fuel Standard (LCFS) and potentially the EU's CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). Plus, the company is set to benefit from the federal 45Z and 45Q tax credits, which directly subsidize carbon sequestration and clean fuel production. That's a significant, policy-backed tailwind.

Here's the quick math on what analysts expect from this pivot:

What this estimate hides is the timing of the CCS project's full go-live, but the projected jump in earnings to over $100 million in FY2027 is a powerful indicator of the expected return on the capital investment. Another key growth driver is simple capacity expansion. The One Earth facility expansion is on track for 2026 completion, which will boost production capacity by 33% at that plant. You can't ignore the strong balance sheet either; REX had $310.5 million in cash, cash equivalents, and short-term investments as of July 31, 2025, with no bank debt, giving them serious financial flexibility to weather commodity price swings.

Beyond domestic production, REX is also benefiting from market expansion through exports. U.S. ethanol exports through March 2025 were up nearly 19% year-over-year, which shows a positive trend for their international sales volume. This combination of a premium product, increased capacity, and strong liquidity suggests a defintely solid path forward, even with the inherent volatility of the agriculture and energy sectors.

• Invest in carbon capture for premium fuel pricing.
• Expand capacity by 33% at a key facility.
• Capitalize on 19% growth in export markets.

For more detail on the current financial position, you should review the full analysis at Breaking Down REX American Resources Corporation (REX) Financial Health: Key Insights for Investors.