Value- PEIX vs REX on valution
there is one thing we've both forgotton. That is Madera. Let me go over the true valuation for PEIX assuming a 30% rise in production from the Madera Plant going forward. Now this calculation is assuming the same margins as in the Mar qtr. PEIX posted $254M in revenues for the Mar qtr, so 30% more would be $76.2M. Margins were 15% in the Mar qtr, so that would mean $11.4M more in gross profit. Then I'm assuming another $1.2M more(33%) in S,G,& A, which brings that down to $10.2. Also I'm assuming using 20M fd shares, so another $.50 EPS from that.
Now PEIX posted $1.50 from operations for the Mar qtr, but if we figure 20M shares vs 16M shares in the Mar qtr, that would be 4/20 dilution or 20%. Therefore the $1.50 would now be $1.20 in the June qtr. So now if we add to that the $.50/qtr incrimental increase, that would mean $1.70/qtr on 20M shares in the June qtr.
However lets take that a step further, and assume 25M fd shares later in the year. 5/25 is another 25% dilution, so now the $1.70 would become $1.27. Lets in addition assume a 35% tax rate as REX has, and that would take it to $.82/qtr.
So now we have $.82/qtr for PEIX going forward, assuming the same margins as in the Mar qtr, 30% more in revenues from the Madera Plant, 25M shares, and a 35% tax rate. That would annualize to $3.20, which with the stock price at $13, would put the PE at 4 fully taxed and duluted going forward.
When we figure REX earnngs $3/qtr going forward(15% higher than in the Mar qtr), we also are assuming the same margins as the Mar qtr & fully taxed(35%) and diluted. With REX, even with $3/qtr, or $12 annualy, that would put the PE at 5.8 going forward.
Therefore PEIX is actually selling for almost a 50% discount to REX, using the same metrix going forward.
