Critical Comparison: Pacific Ethanol (PEIX) and REX American Resources (REX)

Pacific Ethanol (NASDAQ: PEIX) and REX American Resources (NYSE:REX) are both small-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

80.5% of Pacific Ethanol shares are owned by institutional investors. Comparatively, 89.7% of REX American Resources shares are owned by institutional investors. 3.9% of Pacific Ethanol shares are owned by company insiders. Comparatively, 12.2% of REX American Resources shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Pacific Ethanol and REX American Resources’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pacific Ethanol $1.62 billion 0.12 $1.41 million ($0.24) -18.96
REX American Resources $453.80 million 1.26 $32.33 million $5.01 17.33

REX American Resources has lower revenue, but higher earnings than Pacific Ethanol. Pacific Ethanol is trading at a lower price-to-earnings ratio than REX American Resources, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Pacific Ethanol and REX American Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pacific Ethanol 0 0 4 0 3.00
REX American Resources 0 0 0 0 N/A

Pacific Ethanol currently has a consensus price target of $11.50, suggesting a potential upside of 152.75%. Given Pacific Ethanol’s higher possible upside, research analysts clearly believe Pacific Ethanol is more favorable than REX American Resources.

Profitability

This table compares Pacific Ethanol and REX American Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pacific Ethanol -0.51% -2.13% -1.23%
REX American Resources 7.11% 8.29% 7.15%

Risk & Volatility

Pacific Ethanol has a beta of 2.07, meaning that its share price is 107% more volatile than the S&P 500. Comparatively, REX American Resources has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500.

Summary

REX American Resources beats Pacific Ethanol on 8 of the 12 factors compared between the two stocks.

About Pacific Ethanol

Pacific Ethanol, Inc. (Pacific Ethanol) is a marketer and producer of low-carbon renewable fuels in the Western United States. Pacific Ethanol markets all the ethanol produced by four ethanol production facilities located in California, Idaho and Oregon, or the Pacific Ethanol Plants, all the ethanol produced by three other ethanol producers in the Western United States and ethanol purchased from other third-party suppliers throughout the United States. It also markets ethanol co-products, including wet distiller’s grains and syrup (WDG), for the Pacific Ethanol Plants. Its 83% ownership interest in New PE Holdco LLC, the owner of each of the plant holding companies, that collectively own the Pacific Ethanol Plants. Its ethanol customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. Effective September 02, 2014, Pacific Ethanol Inc raised its interest to 96% from 91%, by acquiring a 5% interest, in PE Op Co.

About REX American Resources

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.

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