REX American Resources (REX): Evaluating Valuation After Q2 Earnings Beat but Soft Revenue

REX American Resources (REX) delivered second-quarter 2025 earnings that outpaced expectations. Earnings per share of $0.43 exceeded forecasts. Revenue, however, came in lower than anticipated at $158.56 million.

See our latest analysis for REX American Resources.

After hitting a record high of $33.80, REX American Resources has seen its share price climb 10.2% over the last month and 23% in the past 90 days, reflecting growing investor confidence following its latest earnings beat. Momentum is clearly building, with the company delivering a standout 58% year-to-date share price return and an impressive 42.8% total shareholder return over the past year, even though revenue has been somewhat soft.

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Given the company’s rapid gains and solid earnings beat, the big question now is whether REX American Resources remains undervalued or if further growth is already fully reflected in the stock’s recent run-up.

Price-to-Earnings of 21.7x: Is it justified?

REX American Resources is currently trading at a price-to-earnings (P/E) ratio of 21.7x, putting it well above the industry average of 13.4x. With the latest closing price at $33.72, the market appears to be placing a meaningful premium on REX's earnings relative to its oil and gas peers.

The P/E ratio measures how much investors are paying for each dollar of earnings. In capital-intensive sectors like oil and gas, it is a key gauge because it encapsulates growth prospects, profitability, and perceived risk. In REX's case, this elevated multiple could indicate that the market is confident in its business quality or future potential despite recent volatility in sector earnings.

However, REX is considered expensive compared to the broader US Oil and Gas industry, which is currently at a 13.4x average. This suggests that the market may be factoring in expectations for stronger future results or placing a premium on management quality and operational execution. Notably, while REX's P/E is above the sector average, it is still below the peer average of 33.7x, suggesting it may sit somewhere between overvalued and fair compared to direct competitors.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 21.7x (OVERVALUED)

However, weaker sales growth or sudden shifts in sector sentiment could pose risks to the current bullish outlook for REX American Resources.

Find out about the key risks to this REX American Resources narrative.

Another View: Discounted Cash Flow Perspective

Looking at REX American Resources from the lens of our SWS DCF model reveals a sharp contrast to the earlier multiple-based view. The DCF places the fair value at just $2.09 per share, which is far below the current price of $33.72. This indicates the stock could be significantly overvalued based on projected cash flows. Does this suggest the market is overlooking major risks or simply betting on future catalysts not captured in current forecasts?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out REX American Resources for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 858 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own REX American Resources Narrative

If you’re not convinced by this perspective, or would rather dig deeper on your own terms, you can easily craft your own analysis in just a few minutes using our tools and insights. Do it your way

Prefer to form your own view? Our platform makes it easy to explore a stock's fundamentals and create your own narrative in minutes.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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