Why REX American Resources Corp's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of REX American Resources Corp (NYSE: REX  ) jumped 21% today after announcing fiscal third quarter earnings.

So what: Net sales fell 6.9% to $166.5 million, falling well short of the $189.9 million analysts expected. But net income increased from $0.4 million a year ago to $9.9 million, or $1.21 per share. That crushed the $0.73 expectation from analysts.  

Now what: Gross margins were up significantly and management is expecting a strong harvest to result in lower input costs in the future as well. The downside is that the EPA has recently proposed reducing the amount of biofuels required to be blended with oil, which would reduce demand. This quarter looks positive, but the long-term viability of ethanol is what I question and is why I'm not buying the stock's bump today.

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