Zentek Ltd. (NASDAQ: ZTEK)

Sector: Healthcare Industry: Medical Instruments & Supplies CIK: 0001904501
Market Cap 76.10 Mn
P/B 8.99
P/E -12.81
P/S 114.73
ROIC (Qtr) -83.81
Div Yield % 0.00
Rev 1y % (Qtr) -61.04
Total Debt (Qtr) 1.37 Mn
Debt/Equity (Qtr) 0.16

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 967101.45 provide 7.27x coverage of short-term debt 133023.91, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of (3.93M) provides exceptional 62.36x coverage of interest expenses (62978.99), showing strong debt service capability.
  • Tangible assets of 12.22M provide exceptional 103.54x coverage of deferred revenue 118068.84, showing strong service capability backing.
  • Robust free cash flow of (2.57M) exceeds capital expenditure of (1.35M) by 1.90x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 12.22M provides 8.93x coverage of total debt 1.37M, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of (3.93M) barely covers its investment activities of 1.74M, with a coverage ratio of -2.26, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of (3.93M) provides insufficient coverage of deferred revenue obligations of 118068.84, which is -33.26x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of (3.93M) shows concerning coverage of stock compensation expenses of 527943.48, with a -7.44 ratio indicating potential earnings quality issues.
  • Operating earnings of (6M) show weak coverage of depreciation charges of 407813.77, with a -14.72 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (2.57M) represents just -2.72x of debt issuance 944319.57, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Medical Instruments & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ISRG Intuitive Surgical Inc 174.27 Bn 61.02 17.31 0.00 Bn
2 BDX Becton Dickinson & Co 59.72 Bn 37.77 3.14 19.18 Bn
3 RMD Resmed Inc 39.76 Bn 26.76 7.37 0.85 Bn
4 ALC Alcon Inc 38.93 Bn 37.18 3.82 5.24 Bn
5 WST West Pharmaceutical Services Inc 17.69 Bn 133.13 12.54 0.30 Bn
6 HOLX Hologic Inc 16.81 Bn 30.91 4.07 2.52 Bn
7 COO Cooper Companies, Inc. 16.37 Bn 43.67 4.00 2.51 Bn
8 ALGN Align Technology Inc 13.73 Bn 36.29 3.45 0.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.36 2.75
EV to Cash from Ops. EV/CFO -13.59 39.87
EV to Debt EV to Debt 38.99 27.09
EV to EBIT EV/EBIT -8.89 32.86
EV to EBITDA EV/EBITDA -8.75 19.31
EV to Free Cash Flow [EV/FCF] EV/FCF -20.74 0.88
EV to Market Cap EV to Market Cap 0.70 -4.26
EV to Revenue EV/Rev 80.45 252.61
Price to Book Value [P/B] P/B 8.99 6.13
Price to Earnings [P/E] P/E -12.81 184.03
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -1.09
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 1.36
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.74
Interest Coverage Int. cover (Qtr) 95.29 -117.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 1,206.32 -53.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -55.19 414.02
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -1.48
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 21.80 -57.42
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 15.27 -106.89
EBIT Growth (1y) % EBIT 1y % (Qtr) 21.80 -37.00
EBT Growth (1y) % EBT 1y % (Qtr) 24.81 -42.63
EPS Growth (1y) % EPS 1y % (Qtr) 42.51 -15.05
FCF Growth (1y) % FCF 1y % (Qtr) 50.15 56.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 207.40 67.95
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.04 0.54
Cash Payout Ratio Cash Payout Ratio 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.38 2.51
Current Ratio Curr Ratio (Qtr) 0.79 7.80
Debt to Equity Ratio Debt/Equity (Qtr) 0.16 0.55
Interest Cover Ratio Int Coverage (Qtr) 95.29 -117.83
Times Interest Earned Times Interest Earned (Qtr) 95.29 -117.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -843.30 -2,368.59
EBIT Margin % EBIT Margin % (Qtr) -1,248.64 -2,472.59
EBT Margin % EBT Margin % (Qtr) -895.32 -2,442.52
Gross Margin % Gross Margin % (Qtr) 48.70 30.06
Net Profit Margin % Net Margin % (Qtr) -895.30 -2,438.49