Investors in REX American Resources (NYSE:REX) have earned a 15% return over the past three years

Low-cost index funds make it easy to achieve average market returns. But overall, many stocks are underperforming the market. This is what happened with the REX American Resources Corporation (NYSE: REX) share price. That’s up 15% over three years, but that’s below market performance. At least the stock price has risen over the past year, but only 0.7%.

So let’s assess the underlying fundamentals over the past 3 years and see if they have moved in step with shareholder returns.

Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly reactive dynamic systems and that investors are not always rational. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.

REX American Resources was able to increase its EPS by 45% annually over three years, driving the stock price higher. This EPS growth is greater than the average annual share price increase of 5%. Therefore, it seems that the market has moderated its growth expectations somewhat. This cautious sentiment is reflected in its (rather low) P/E ratio of 10.08.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

NYSE: REX earnings per share growth October 16, 2022

It’s of course great to see how REX American Resources has grown its earnings over the years, but the future is more important to shareholders. Take a closer look at the financial health of REX American Resources with this free report on its balance sheet.

A different perspective

We are pleased to report that REX American Resources shareholders received a total shareholder return of 0.7% year over year. Notably, the five-year annualized TSR loss of 0.8% per year compares very unfavorably to recent share price performance. We generally value long-term performance more than short-term performance, but the recent improvement could point to a (positive) inflection point within the company. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we found 1 warning sign for REX American Resources which you should be aware of before investing here.

Sure REX American Resources may not be the best stock to buy. So you might want to see this free collection of growth values.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Robert D. Coleman