Zynex Inc. (ZYXI) — Reasonably Valued With Moderate Growth Factors
Zynex shares moved -37.0% over the last 52 weeks, with a high of $17.25 and a low of $6.88. During this time, the stock lagged the S&P 500 index by -52.4%. As of April 2023, the company's 50-day average price is $8.5. Zynex, Inc., together with its subsidiaries, designs, manufactures, and markets medical devices to treat chronic and acute pain; and activate and exercise muscles for rehabilitative purposes with electrical stimulation. The small-cap Health Care company has 900 full time employees and is based in Englewood, CO. Zynex has not offered any dividends in the last year.
The Business Runs With Low Leverage Levels:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $31,917 | $45,472 | $80,122 | $130,301 | $158,167 | $185,842 |
| Revenue Growth | n/a | 42.47% | 76.2% | 62.63% | 21.39% | 17.5% |
| Gross Margins | 32% | 24% | 13% | 17% | 15% | 10% |
| Net Margins | 30% | 21% | 11% | 13% | 11% | 9% |
| Net Income (k) | $9,552 | $9,492 | $9,074 | $17,103 | $17,048 | $15,969 |
| Net Interest Expense (k) | $154 | $875 | -$19 | -$95 | $391 | $1,771 |
| Depreciation & Amort. (k) | $153 | $778 | $1,572 | $2,261 | $2,197 | $2,591 |
| Earnings Per Share | $0.28 | $0.28 | $0.24 | $0.44 | $0.44 | $0.43 |
| Diluted Shares (k) | 34,043 | 33,963 | 38,438 | 39,197 | 39,127 | 29,787 |
| Share Price | $3.04 | $6.79 | $13.97 | $13.09 | $7.1 | $8.66 |
| P/E Ratio | 10.48 | 23.41 | 58.21 | 29.09 | 16.14 | 20.62 |
| Free Cash Flow (k) | $8,326 | $6,143 | -$167 | $6,340 | $13,328 | $15,609 |
| Capital Expenditures | $1,082 | $160 | $985 | $609 | $418 | $716 |
| Entreprise Value (k) | $95,440 | $210,801 | $499,894 | $511,399 | $273,267 | $306,575 |
| EV / EBITDA | 9.07 | 16.57 | 42.29 | 20.77 | 10.87 | 13.36 |
| Long Term Debt (k) | $2,252 | $0 | $0 | $20,023 | $14,962 | $57,331 |
| Net Debt / EBITDA | -0.32 | -0.93 | -2.91 | -0.36 | 0.01 | 0.45 |
| Current Ratio | 2.05 | 4.34 | 6.23 | 3.62 | 3.3 | 5.19 |
A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
Compared to the Health Care sector's average of 30.21, Zynex has a trailing twelve month P/E ratio of 19.8 and, according to its EPS guidance of $0.54, an expected P/E ratio of 15.7. Zynex's PEG ratio is 2.01 based on its 9.8% compound average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued. Additionally, Zynex seems overvalued in terms of its book value, since its P/B ratio is 5.06 compared to its sector average of 4.08. As of the date of publication, the company's shares are trading 100.9% above their Graham number of $4.31. Zynex's elevated P/B ratio notwithstanding, the company's strong cash flows, decent earnings multiple, and healthy debt levels factor towards our conclusion that the stock is fairly valued.
Zynex Has an Analyst Consensus of Strong Upside Potential:
4 analysts are following Zynex and have set target prices ranging from $13.0 to $27.0 per share. On average, they have given the company a rating of buy. At the current price of $8.5, ZYXI is trading -55.6% away from its average analyst target price of $19.13 per share, implying an analyst consensus of strong upside potential for the stock. The company has an unusually large proportion of its shares sold short since 27.2% of the company's shares are tied to short positions. Institutions own 31.3% of Zynex's shares, while the insider ownership rate stands at 48.06%. which is a large amount of insider shareholders. The company's biggest shareholder is Blackrock Inc. with a 5% stake in the company worth $12,798,111.
