Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?
So should Zentalis Pharmaceuticals (NASDAQ:ZNTL) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
See our latest analysis for Zentalis Pharmaceuticals
Does Zentalis Pharmaceuticals Have A Long Cash Runway?
You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. In September 2022, Zentalis Pharmaceuticals had US$422m in cash, and was debt-free. Looking at the last year, the company burnt through US$168m. So it had a cash runway of about 2.5 years from September 2022. Arguably, that's a prudent and sensible length of runway to have. The image below shows how its cash balance has been changing over the last few years.
NasdaqGM:ZNTL Debt to Equity History December 20th 2022
How Is Zentalis Pharmaceuticals' Cash Burn Changing Over Time?
Because Zentalis Pharmaceuticals isn't currently generating revenue, we consider it an early-stage business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. With the cash burn rate up 13% in the last year, it seems that the company is ratcheting up investment in the business over time. That's not necessarily a bad thing, but investors should be mindful of the fact that will shorten the cash runway. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.
How Easily Can Zentalis Pharmaceuticals Raise Cash?
Given its cash burn trajectory, Zentalis Pharmaceuticals shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.
Since it has a market capitalisation of US$1.1b, Zentalis Pharmaceuticals' US$168m in cash burn equates to about 16% of its market value. As a result, we'd venture that the company could raise more cash for growth without much trouble, albeit at the cost of some dilution.
So, Should We Worry About Zentalis Pharmaceuticals' Cash Burn?
Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Zentalis Pharmaceuticals' cash runway was relatively promising. Considering all the factors discussed in this article, we're not overly concerned about the company's cash burn, although we do think shareholders should keep an eye on how it develops. On another note, Zentalis Pharmaceuticals has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies insiders are buying, and this list of stocks growth stocks (according to analyst forecasts)
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
即使一家企業在虧損,如果股東以合適的價格收購一家好企業,他們也有可能賺錢。例如,雖然軟體即服務業務Salesforce.com在經常性收入增長的同時多年來一直虧損,但如果你從2005年開始持有股票,你確實會做得非常好。但是,儘管歷史讚頌這些罕見的成功,但那些失敗的往往會被遺忘;誰還記得Pets.com?
所以也應該這樣Zentaris製藥公司納斯達克:ZNTL)股東擔心其燒錢?在這份報告中,我們將考慮該公司的年度自由現金流為負,此後將其稱為“現金消耗”。我們將首先將其現金消耗與其現金儲備進行比較,以計算其現金跑道。
查看我們對Zentaris製藥公司的最新分析
Zentalis製藥公司有很長的現金跑道嗎?
你可以通過將公司擁有的現金數量除以它花掉這些現金的速度來計算公司的現金跑道。2022年9月,Zentalis PharmPharmticals擁有4.22億美元現金,而且沒有債務。回顧去年,該公司燒掉了1.68億美元。因此,從2022年9月開始,它的現金跑道大約有2.5年。可以說,這是一個謹慎和合理的跑道長度。下圖顯示了其現金餘額在過去幾年中的變化情況。
NasdaqGM:ZNTL債轉股歷史2022年12月20日
Zentalis製藥公司的現金消耗是如何隨著時間的推移而變化的?
由於Zentalis製藥公司目前沒有產生收入,我們認為這是一項處於早期階段的業務。儘管如此,我們仍然可以檢查其燒錢軌跡,作為我們評估其燒錢情況的一部分。隨著去年現金消耗率上升了13%,該公司似乎正在逐步增加對這項業務的投資。這並不一定是一件壞事,但投資者應該注意這樣一個事實,那將縮短現金跑道。雖然過去總是值得研究的,但最重要的是未來。因此,看看我們的分析師對該公司的預測是很有意義的。
Zentaris製藥公司籌集現金的難度有多大?
鑑於其燒錢的軌跡,Zentalis製藥的股東可能希望考慮一下,儘管它有堅實的現金跑道,但它籌集更多現金的難度有多大。一般來說,上市企業可以通過發行股票或承擔債務來籌集新的現金。通常情況下,企業會自行發售新股,以籌集現金並推動增長。我們可以將一家公司的現金消耗與其市值進行比較,以瞭解一家公司需要發行多少新股才能為一年的運營提供資金。
由於Zentalis PharmPharmticals的市值為11億美元,其1.68億美元的現金消耗相當於其市值的16%左右。因此,我們冒險認為,該公司可以毫不費力地籌集更多現金來實現增長,儘管代價是一些股權稀釋。
那麼,我們應該擔心Zentalis製藥公司的燒錢嗎?
儘管它不斷增加的現金消耗讓我們有點緊張,但我們不得不提到,我們認為Zentalis PharmPharmticals的現金跑道相對來說是有希望的。考慮到本文討論的所有因素,我們並不過分擔心公司的現金消耗,儘管我們確實認為股東應該密切關注公司的發展。另一方面,Zentalis製藥公司已經3個警示標誌(還有一點不可忽視)我們認為你應該知道這一點。
當然了,如果你把目光投向別處,你可能會發現這是一筆很棒的投資。所以讓我們來看看這個免費內部人士正在買入的公司名單,以及這份名單中的成長股(根據分析師預測)
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。