Zentek (ZEN) AI Stock Analysis

• Market Cap: $144.99M
• Dividend Yield: N/A
• Average Volume (3M): 37.29K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.52
• Revenue Growth: 92.38%
• EPS Growth: 12.79%
• Country: CA
• Employees: 24
• Sector: Healthcare
• Sector Strength: 70
• Industry: Medical - Instruments & Supplies
• EPS (TTM): -0.10
• Shares Outstanding: 104,311,450
• 10 Day Avg. Volume: 35,004
• 30 Day Avg. Volume: 37,291
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 4468.68
• Price to Cash Flow (P/CF): -24.10
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

Zentek's overall score is heavily influenced by its financial struggles, with persistent losses and negative cash flows posing significant risks. While technical analysis suggests some long-term stability, valuation concerns due to unprofitability and mixed corporate events further impact the stock's attractiveness.

Zentek Business Overview & Revenue Model

Company Description

Zentek Ltd. (ZEN) is a Canadian-based nanotechnology company focused on the research, development, and commercialization of innovative nanomaterials. The company's core products and services revolve around advanced materials for healthcare, protective coatings, and environmental applications. Zentek leverages its expertise in graphene-based technologies to provide solutions that enhance product performance, safety, and sustainability.

How the Company Makes Money

Zentek generates revenue primarily through the commercialization and sale of its nanotechnology-based products and solutions. Key revenue streams include the sales of graphene-based materials and coatings, which are used in various industries such as healthcare, aerospace, and automotive for enhanced protection and performance. The company also collaborates with strategic partners to co-develop and market new products, contributing to its earnings. Additionally, Zentek may earn revenue from licensing its proprietary technologies and intellectual property to other companies seeking to incorporate advanced nanomaterials into their offerings.

Zentek Financial Statement Overview

Summary

Zentek faces significant financial challenges, particularly with profitability and cash flow generation. Despite maintaining low debt levels, the negative margins and cash flows highlight operational inefficiencies.

Income Statement

Zentek has been struggling with profitability, as indicated by consistent negative gross and net profit margins over the analyzed period. The most recent TTM figures show a gross profit margin of -3412%, a net profit margin of -16480%, and a declining revenue trend. These metrics highlight significant challenges in cost management and revenue generation, severely impacting the company's income statement performance.

Balance Sheet

Zentek's balance sheet shows moderate leverage with a debt-to-equity ratio of 0.05 in the latest TTM period, suggesting low reliance on debt financing. However, the company's equity ratio has been decreasing, from 91% in 2020 to 85% in the latest TTM, indicating a potential weakening in financial stability. Although the company has a solid equity base, the declining trend in equity ratio requires attention.

Cash Flow

The cash flow analysis reveals substantial challenges, with persistent negative free cash flow and operating cash flow figures. The latest TTM period shows a concerning free cash flow to net income ratio of 0.63, indicating a weak cash conversion from operations. Despite occasional positive financing cash flows, overall cash flows remain under pressure, affecting financial flexibility.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
64.66K	29.82K	72.86K	339.67K	2.35K	0.00
	Gross Profit
-2.21M	-385.06K	-780.48K	-275.04K	-124.44K	-24.88K
	EBIT
-7.09M	-10.99M	-14.15M	-12.56M	-3.98M	-1.68M
	EBITDA
-9.73M	-11.08M	-13.75M	-11.27M	-3.73M	-1.55M
	Net Income Common Stockholders
-10.66M	-11.70M	-14.41M	-38.69M	-3.87M	-1.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.08M	3.52M	10.36M	26.68M	3.09M	805.95K
	Total Assets
12.57M	22.59M	33.29M	37.98M	30.25M	26.24M
	Total Debt
0.00	1.24M	1.61M	2.23M	404.32K	0.00
	Net Debt
-9.56M	-2.28M	-8.75M	-24.44M	-2.69M	-805.95K
	Total Liabilities
337.06K	2.41M	2.90M	3.44M	2.79M	527.58K
	Stockholders Equity
12.23M	20.17M	30.38M	34.55M	27.46M	25.71M
Cash Flow		Free Cash Flow
-6.70M	-8.37M	-15.23M	-11.97M	-2.05M	-1.46M
	Operating Cash Flow
-6.69M	-8.05M	-12.96M	-7.99M	-1.79M	-1.36M
	Investing Cash Flow
408.83K	1.88M	-2.31M	-7.25M	-1.23M	-1.24M
	Financing Cash Flow
2.42M	-665.47K	-1.05M	38.82M	5.31M	2.18M

Zentek Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.35
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ZEN, the sentiment is Negative. The current price of 1.35 is below the 20-day moving average (MA) of 1.53, below the 50-day MA of 1.48, and below the 200-day MA of 1.35, indicating a bearish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 59.19 is Neutral, neither overbought nor oversold. The STOCH value of 71.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ZEN.

Zentek Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GRA	48 Neutral	C$394.11M	―	-10.44%	―	12.92%	-3.66%
Sector *	48 Neutral	$6.25B	1.14	-46.26%	2.69%	19.24%	1.75%
NGC	44 Neutral	$12.45M	―	-329.25%	―	31.19%	-46.99%
ZEN	38 Underperform	$144.99M	―	-54.98%	―	92.38%	12.79%
SRL	37 Underperform	C$19.91M	―	-20.39%	―	―	29.22%
FMS	28 Underperform	$7.20M	―	-16.19%	―	―	-49.81%
HPQ	26 Underperform	C$81.19M	―	-399.98%	―	―	7.43%

Zentek Corporate Events

Zentek Secures $2 Million Through Private Placement of Debenture Units

Zentek Ltd. has successfully closed a non-brokered private placement of debenture units, raising $2,000,000 in gross proceeds. The debenture units consist of secured convertible debentures and warrants, with the debentures maturing in 2028 and convertible into common shares at a specified price. The proceeds from this offering will be used for working capital and general corporate purposes, potentially strengthening Zentek’s financial position and supporting its ongoing operations and strategic initiatives. This move could enhance Zentek’s industry positioning by providing the necessary capital to further develop its technology and expand its market reach.

Spark’s Take on TSE:ZEN Stock

According to Spark, TipRanks’ AI Analyst, TSE:ZEN is a Neutral.

Zentek’s overall score reflects significant financial challenges with persistent negative profitability and cash flow issues. While recent technical indicators show some positive trends, valuation remains a concern due to unprofitability. Corporate events provide a mix of challenges and opportunities, with promising product development offset by financial liabilities from tax reassessments.

To see Spark’s full report on TSE:ZEN stock, click here.

Zentek Faces Tax Reassessment Following CRA Audit

Zentek Ltd. announced that the Canada Revenue Agency (CRA) has completed an audit of the company’s 2018 and 2019 renunciation of Canadian exploration expenses (CEE) related to flow-through financings. The audit resulted in a reclassification of approximately $507,000 of the renounced expenses for 2018, leading to a tax assessment of $59,693. Zentek anticipates a similar reclassification for 2019 and has committed to indemnifying subscribers for tax liabilities arising from disallowed renunciations, with a maximum liability expected to be around $527,000. This development may impact Zentek’s financial obligations and its stakeholders, particularly those involved in the flow-through financings.

Zentek Completes Key Testing for ZenGUARD™ Air Filters

Zentek Ltd. has successfully completed shelf-life efficacy testing for its ZenGUARD™ Enhanced Air Filters, demonstrating that the product maintains its viral filtration efficiency over a 20-month period. This achievement is crucial for the commercialization of the filters as a Class I medical device, ensuring compliance with medical device regulations and confirming the product’s reliability and safety for stakeholders.

Zentek Initiates US$30 Million At-The-Market Offering in the U.S.

Zentek Ltd. has announced a US$30 million at-the-market offering in the United States, with Rodman & Renshaw LLC acting as the exclusive sales agent. The proceeds from this offering will be used for corporate purposes, and the sales will be conducted on the Nasdaq Capital Markets or other recognized U.S. marketplaces, excluding Canadian markets.

Zentek’s Albany Graphite Corp. Achieves Breakthrough in Graphite Purification and Rare Earth Element Recovery

Zentek’s subsidiary, Albany Graphite Corp., has announced significant results from its thermal purification testwork using a fluidized bed reactor. The process demonstrated the ability to achieve 99.9991% purity in graphite and recover rare earth elements as by-products, enhancing Zentek’s potential in the battery and nuclear graphite markets.

Zentek Readies Launch for ZenGUARD™ Air Filters in Canadian Market

Zentek is preparing to launch its ZenGUARD™ Enhanced Air Filters in Canada, prioritizing necessary documentation to comply with regulatory standards. The company aims to initiate sales by March 2025, leveraging its manufacturing partner’s network and government procurement opportunities to drive growth. ZenGUARD™ Enhanced Air Filters have been validated as safe and effective, making them eligible for government purchase, which could enhance Zentek’s market positioning and provide potential cost and emission savings for government agencies.