Tristan R. Brown
Alternative energy, long/short equity, commodities, energy

Rex American Resources Remains Overvalued

Executive summary

Corn ethanol operating margins have begun to deteriorate due to a falling crush spread and the prospect of reduced demand for corn ethanol in 2014. Analyst estimates for REX American Resources in FY 2013 and FY 2014 have fallen as a result, although they remain quite optimistic in light of the industry's expected operating environment next year. Shares of the company remain overvalued as a result, and investors could see up to 45% downside as analyst estimates continue to be revised down to reflect this.

FQ2 2013 diluted EPS for independent corn ethanol producer REX American Resources (NYSE:REX) came in 15% above analyst estimates at $0.71 (versus $0.62 expected). This was the company's second consecutive beat...

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