Intrinsic value of Rex American Resources - REX

Previous Close

$71.60

  Intrinsic Value

$77.11

stock screener

  Rating & Target

hold

+8%

Previous close

$71.60

 
Intrinsic value

$77.11

 
Up/down potential

+8%

 
Rating

hold

We calculate the intrinsic value of REX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  483
  515
  549
  583
  619
  657
  696
  737
  779
  824
  870
  919
  969
  1,022
  1,077
  1,135
  1,196
  1,259
  1,325
  1,395
  1,468
  1,544
  1,624
  1,708
  1,796
  1,888
  1,984
  2,086
  2,192
  2,303
Variable operating expenses, $m
  430
  459
  488
  519
  551
  585
  619
  656
  694
  733
  774
  817
  863
  910
  959
  1,010
  1,064
  1,121
  1,180
  1,242
  1,306
  1,374
  1,445
  1,520
  1,598
  1,680
  1,766
  1,856
  1,951
  2,050
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  430
  459
  488
  519
  551
  585
  619
  656
  694
  733
  774
  817
  863
  910
  959
  1,010
  1,064
  1,121
  1,180
  1,242
  1,306
  1,374
  1,445
  1,520
  1,598
  1,680
  1,766
  1,856
  1,951
  2,050
Operating income, $m
  53
  57
  60
  64
  68
  72
  77
  81
  86
  91
  96
  101
  107
  112
  119
  125
  132
  139
  146
  153
  161
  170
  179
  188
  198
  208
  218
  229
  241
  253
EBITDA, $m
  76
  81
  86
  92
  97
  103
  109
  116
  123
  129
  137
  144
  152
  161
  169
  178
  188
  198
  208
  219
  231
  243
  255
  268
  282
  297
  312
  328
  345
  362
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
Earnings before tax, $m
  53
  56
  60
  63
  67
  70
  74
  78
  82
  87
  91
  96
  101
  106
  112
  118
  124
  130
  136
  143
  151
  158
  166
  174
  183
  192
  202
  212
  222
  233
Tax expense, $m
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
Net income, $m
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  90
  95
  100
  105
  110
  115
  121
  127
  134
  140
  147
  154
  162
  170

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  330
  352
  375
  398
  423
  449
  475
  503
  532
  563
  594
  627
  662
  698
  736
  775
  817
  860
  905
  953
  1,003
  1,055
  1,109
  1,166
  1,226
  1,289
  1,355
  1,425
  1,497
  1,573
Adjusted assets (=assets-cash), $m
  330
  352
  375
  398
  423
  449
  475
  503
  532
  563
  594
  627
  662
  698
  736
  775
  817
  860
  905
  953
  1,003
  1,055
  1,109
  1,166
  1,226
  1,289
  1,355
  1,425
  1,497
  1,573
Revenue / Adjusted assets
  1.464
  1.463
  1.464
  1.465
  1.463
  1.463
  1.465
  1.465
  1.464
  1.464
  1.465
  1.466
  1.464
  1.464
  1.463
  1.465
  1.464
  1.464
  1.464
  1.464
  1.464
  1.464
  1.464
  1.465
  1.465
  1.465
  1.464
  1.464
  1.464
  1.464
Average production assets, $m
  203
  216
  230
  245
  260
  276
  292
  309
  327
  346
  365
  386
  407
  429
  452
  477
  502
  529
  557
  586
  616
  648
  682
  717
  754
  793
  833
  876
  921
  967
Working capital, $m
  28
  29
  31
  33
  35
  37
  40
  42
  44
  47
  50
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  97
  102
  108
  113
  119
  125
  131
Total debt, $m
  7
  14
  21
  28
  36
  44
  52
  61
  70
  80
  90
  100
  111
  123
  134
  147
  160
  174
  188
  203
  218
  235
  252
  270
  289
  309
  330
  351
  374
  398
Total liabilities, $m
  104
  111
  118
  125
  133
  141
  150
  159
  168
  177
  187
  198
  209
  220
  232
  244
  257
  271
  285
  300
  316
  332
  349
  367
  386
  406
  427
  449
  472
  496
Total equity, $m
  226
  241
  257
  273
  290
  307
  326
  345
  365
  385
  407
  430
  453
  478
  504
  531
  559
  589
  620
  653
  687
  722
  760
  799
  840
  883
  928
  976
  1,026
  1,078
Total liabilities and equity, $m
  330
  352
  375
  398
  423
  448
  476
  504
  533
  562
  594
  628
  662
  698
  736
  775
  816
  860
  905
  953
  1,003
  1,054
  1,109
  1,166
  1,226
  1,289
  1,355
  1,425
  1,498
  1,574
Debt-to-equity ratio
  0.030
  0.060
  0.080
  0.100
  0.120
  0.140
  0.160
  0.180
  0.190
  0.210
  0.220
  0.230
  0.250
  0.260
  0.270
  0.280
  0.290
  0.290
  0.300
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.370
Adjusted equity ratio
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  90
  95
  100
  105
  110
  115
  121
  127
  134
  140
  147
  154
  162
  170
Depreciation, amort., depletion, $m
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  56
  59
  63
  66
  69
  73
  77
  81
  85
  89
  94
  98
  103
  109
Funds from operations, $m
  62
  65
  69
  74
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
  133
  139
  147
  154
  162
  170
  179
  188
  198
  208
  218
  229
  241
  253
  266
  279
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
Cash from operations, $m
  60
  64
  68
  72
  76
  80
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
  151
  158
  166
  175
  184
  193
  203
  213
  224
  235
  247
  260
  273
Maintenance CAPEX, $m
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -56
  -59
  -63
  -66
  -69
  -73
  -77
  -81
  -85
  -89
  -94
  -98
  -103
New CAPEX, $m
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
Cash from investing activities, $m
  -34
  -36
  -38
  -41
  -43
  -45
  -47
  -50
  -53
  -56
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -101
  -107
  -112
  -118
  -124
  -130
  -137
  -143
  -150
Free cash flow, $m
  26
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
  111
  116
  122
Issuance/(repayment) of debt, $m
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  33
  34
  36
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  90
  94
  99
  104
  109
  115
  120
  126
  133
  139
  146
Retained Cash Flow (-), $m
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
Prev. year cash balance distribution, $m
  169
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  188
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
  74
  77
  81
  85
  90
  94
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  180
  18
  18
  18
  19
  19
  19
  18
  18
  17
  17
  16
  15
  14
  13
  12
  11
  9
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Rex American Resources Corporation is a holding company. As of January 31, 2017, the Company had invested in three ethanol production entities. It operates through alternative energy segment. As of January 31, 2017, the Company's ethanol investments include One Earth Energy, LLC (One Earth), NuGen Energy, LLC (NuGen) and Big River Resources, LLC (Big River). One Earth has its ethanol production facility in Gibson City, Illinois. NuGen operates an ethanol producing facility in Marion, South Dakota. Big River is a holding company for various entities, including Big River Resources West Burlington, LLC, which operates an ethanol plant in West Burlington, Iowa. Big River has interest in Big River United Energy, LLC, which operates an ethanol production facility located in Dyersville, Iowa. Big River has interest in an ethanol production facility, which is located in Boyceville, Wisconsin.

FINANCIAL RATIOS  of  Rex American Resources (REX)

Valuation Ratios
P/E Ratio 14.7
Price to Sales 1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 8.5
Growth Rates
Sales Growth Rate 4.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.7%
Cap. Spend. - 3 Yr. Gr. Rate 28.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.4%
Ret/ On Assets - 3 Yr. Avg. 11.5%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 14.6%
Return On Equity 9.8%
Return On Equity - 3 Yr. Avg. 15.6%
Asset Turnover 1
Profitability Ratios
Gross Margin 15.6%
Gross Margin - 3 Yr. Avg. 17.4%
EBITDA Margin 17%
EBITDA Margin - 3 Yr. Avg. 21.1%
Operating Margin 11%
Oper. Margin - 3 Yr. Avg. 13.9%
Pre-Tax Margin 12.6%
Pre-Tax Margin - 3 Yr. Avg. 17.1%
Net Profit Margin 7%
Net Profit Margin - 3 Yr. Avg. 9.8%
Effective Tax Rate 29.8%
Eff/ Tax Rate - 3 Yr. Avg. 30.5%
Payout Ratio 12.5%

REX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the REX stock intrinsic value calculation we used $452.586 million for the last fiscal year's total revenue generated by Rex American Resources. The default revenue input number comes from 0001 income statement of Rex American Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our REX stock valuation model: a) initial revenue growth rate of 6.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for REX is calculated based on our internal credit rating of Rex American Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Rex American Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of REX stock the variable cost ratio is equal to 89%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for REX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Rex American Resources.

Corporate tax rate of 27% is the nominal tax rate for Rex American Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the REX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for REX are equal to 42%.

Life of production assets of 8.9 years is the average useful life of capital assets used in Rex American Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for REX is equal to 5.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $381.492 million for Rex American Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 6.434 million for Rex American Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Rex American Resources at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Dayton company triples its profit   [Aug-28-18 11:02AM  American City Business Journals]
▶ REX: Fiscal 2Q Earnings Snapshot   [07:19AM  Associated Press]
▶ The List: Dayton-Area Public Company Executive Compensation   [Jul-02-18 05:16AM  American City Business Journals]
▶ Dayton company posts $120M in first-quarter sales   [May-23-18 09:35AM  American City Business Journals]
▶ REX: Fiscal 1Q Earnings Snapshot   [07:05AM  Associated Press]
▶ Here are REX Americans 3 highest-paid executives   [May-02-18 03:02PM  American City Business Journals]
▶ REX posts 4Q profit   [07:47AM  Associated Press]
▶ REX posts 3Q profit   [Nov-29-17 07:06AM  Associated Press]
▶ REX posts 2Q profit   [Aug-31-17 08:04PM  Associated Press]
▶ REX American sees 2Q profit tumble, stock price falls   [Aug-30-17 04:36PM  American City Business Journals]
▶ Anglo American appoints Chambers as next chairman   [Jun-07-17 03:31AM  Reuters]
▶ REX posts 1Q profit   [May-24-17 07:04AM  Associated Press]
▶ Here are REX American Resources 3 highest-paid executives   [May-12-17 07:20AM  American City Business Journals]
▶ Dayton ethanol company plans up to $30M in plant expansions   [Apr-03-17 06:25AM  at bizjournals.com]
▶ Dayton ethanol company plans up to $30M in plant expansions   [06:25AM  American City Business Journals]
▶ REX posts 4Q profit   [07:24AM  Associated Press]
▶ Why The Ethanol Industry Should Fear President Trump   [Jan-22-17 06:27PM  at Forbes]

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