Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.10B
• Dividend Yield: N/A
• Average Volume (3M): 723.49K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.05
• Revenue Growth: 4.71%
• EPS Growth: 95.60%
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.47
• Shares Outstanding: 52,756,645
• 10 Day Avg. Volume: 1,001,573
• 30 Day Avg. Volume: 723,494
• PEG Ratio: 0.01
• Price to Book (P/B): 4.30
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 14.72
• Enterprise Value/Market Cap: 1.31
• Enterprise Value/Revenue: 0.30
• Enterprise Value/Gross Profit: 3.83
• Enterprise Value/Ebitda: 4.66
• 1Y Price Target: $28.50
• Price Target Upside: 36.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 71 Outperform
• Price Target: $21.50 ▲(2.67%Upside)

Penguin Solutions scores a 71, driven by strong earnings call insights and technical momentum, offset by poor valuation metrics and profitability challenges. The company's strategic initiatives and revenue growth are strong positives, while the negative P/E ratio and lack of dividend yield present valuation concerns.

Positive Factors

Earnings

The company reported well ahead of expectations for F2Q25 results, with revenue significantly surpassing consensus estimates.

Guidance

The company raised the lower end of the guidance range for both FY25 revenue and earnings, indicating confidence in further growth.

Partnerships

Strategic partnerships, such as with Dell and SK Telecom, are progressing and creating new customer opportunities.

Negative Factors

Advanced Compute Sales

There is a sharp Advanced Compute hardware decline expected, viewed as typical lumpiness and also contemplating weaker government spending.

CXL Ecosystem

The CXL ecosystem has seen delays, with FY25 contributions expected at the low end of projections.

Stock Performance

The stock is down approximately 16% year-to-date, underperforming the Russell 3000 index.

Penguin Solutions Business Overview & Revenue Model

Company Description

Penguin Solutions, Inc. engages in the designing and development of enterprise solutions worldwide. It operates through three segments: Advanced Computing, Integrated Memory, and Optimized LED. It offers dynamic random access memory modules, solid-state and flash storage, and other advanced integrated memory solutions for networking and telecom, data analytics, artificial intelligence and machine learning applications; and supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging services. The company also provides Penguin Computing that focus on technical computing for core and cloud environments through high-performance computing and AI solutions; and Penguin Edge, an edge computing solution for embedded and wireless applications, such as high-performance products for government, health care, manufacturing, and telecommunications applications. In addition, it offers Stratus, which provides simplified, protected, and autonomous fault tolerant computing solutions in the data center and at the Edge through hardware and software services; and solutions to education, energy, financial services, government, hyperscale, and manufacturing markets. Further, the company provides LED chip products comprising blue and green LED chips based on gallium nitride, and related materials under Cree LED brand; and surface mount devices under the Cree LED XLamp and J Series brands. It sells its products directly to original equipment manufacturers, enterprise, government and other end customers through direct sales force, e-commerce, customer service representatives, on-site field application engineers, independent sales representatives, distributors, integrators, and resellers. The company was formerly known as SMART Global Holdings, Inc. and changed its name to Penguin Solutions, Inc. in October 2024. Penguin Solutions, Inc. was founded in 1988 and is based in Grand Cayman, Cayman Islands.

How the Company Makes Money

Penguin Solutions makes money through the sale and deployment of its high-performance computing systems and software solutions. The company's primary revenue streams include the direct sale of hardware and software products, subscription-based services for data analytics and AI platforms, and custom consulting services for enterprises seeking to implement advanced computing technologies. Additionally, Penguin Solutions may enter into strategic partnerships with other technology firms to enhance its product offerings and expand its market reach, thereby contributing to its earnings. The company also benefits from long-term contracts with key clients, ensuring a stable and recurring revenue base.

Penguin Solutions Financial Statement Overview

Summary

Penguin Solutions shows strong revenue growth and cash flow management, but struggles with profitability due to negative net profit margin and net income. The balance sheet is stable with moderate leverage and a healthy equity base.

Income Statement

Penguin Solutions has shown a solid revenue growth rate of 12.63% TTM compared to the previous annual period, indicating good sales performance. However, the company is struggling with profitability, as shown by the negative net profit margin of -0.43% TTM and negative net income figures. While the EBIT and EBITDA margins have improved to 4.26% and 7.15% respectively, these are still relatively low, affecting the overall profitability.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.19 TTM, indicating moderate leverage. The company's return on equity (ROE) is negative due to the net loss, but the equity ratio is healthy at 33.26%, suggesting a solid equity base. The increase in stockholders' equity from previous periods is a positive sign of growing investor confidence.

Cash Flow

The company has demonstrated strong cash flow management with a significant increase in free cash flow by 143.45% TTM. The operating cash flow to net income ratio is robust at 27.40, indicating strong cash generation relative to earnings. The free cash flow to net income ratio is also positive at 24.96, highlighting effective cash utilization despite the net losses.

Breakdown	TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	1.32B	1.17B	1.44B	1.40B	1.06B	1.12B
Gross Profit	378.53M	342.91M	415.17M	391.05M	237.97M	216.40M
EBITDA	94.22M	62.93M	68.54M	113.49M	19.81M	60.79M
Net Income	-5.63M	-52.47M	-187.53M	66.56M	21.31M	-1.14M
Balance Sheet
Total Assets	1.81B	1.47B	1.51B	1.57B	1.34B	786.61M
Cash, Cash Equivalents and Short-Term Investments	647.00M	389.48M	390.81M	313.33M	222.99M	150.81M
Total Debt	715.61M	717.89M	856.85M	651.14M	398.26M	221.71M
Total Liabilities	1.20B	1.08B	1.28B	1.19B	1.03B	504.50M
Stockholders Equity	602.53M	391.38M	222.47M	371.61M	310.25M	282.10M
Cash Flow
Free Cash Flow	140.58M	57.76M	64.97M	84.57M	136.68M	54.76M
Operating Cash Flow	154.32M	77.19M	104.39M	104.93M	153.35M	87.20M
Investing Cash Flow	-26.48M	107.58M	-298.57M	-38.97M	-84.18M	-32.04M
Financing Cash Flow	51.90M	-210.10M	236.42M	73.88M	2.85M	12.59M

Penguin Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 20.94
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PENG, the sentiment is Positive. The current price of 20.94 is above the 20-day moving average (MA) of 20.04, above the 50-day MA of 18.87, and above the 200-day MA of 18.76, indicating a bullish trend. The MACD of 0.51 indicates Negative momentum. The RSI at 64.95 is Neutral, neither overbought nor oversold. The STOCH value of 68.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PENG.

Penguin Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PENG	71 Outperform	$1.10B	―	-1.21%	―	4.71%	95.60%
LYTS	71 Outperform	$528.68M	24.66	10.42%	1.12%	17.89%	-23.37%
LYTS	71 Outperform	$528.68M	24.66	10.42%	1.12%	17.89%	-23.37%
BELFA	70 Outperform	$1.25B	26.72	11.87%	0.26%	-6.15%	-42.24%
BELFA	70 Outperform	$1.25B	26.72	11.87%	0.26%	-6.15%	-42.24%
CTS	69 Neutral	$1.33B	22.55	11.39%	0.36%	-2.76%	16.64%
CTS	69 Neutral	$1.33B	22.55	11.39%	0.36%	-2.76%	16.64%
FARO	68 Neutral	$848.20M	―	-0.34%	―	-4.76%	97.93%
FARO	68 Neutral	$848.20M	―	-0.34%	―	-4.76%	97.93%
Sector *	63 Neutral	£501.37M	10.64	-8.56%	2.51%	4.36%	-29.71%
MLAB	50 Neutral	$564.09M	―	-1.29%	0.62%	11.47%	99.25%
MLAB	50 Neutral	$564.09M	―	-1.29%	0.62%	11.47%	99.25%

Penguin Solutions Corporate Events

Penguin Solutions Secures $400M Credit Facility

On June 24, 2025, Penguin Solutions, Inc. completed a refinancing of its credit facilities by establishing a $400 million revolving credit facility, which includes a $35 million letter of credit subfacility. This move, led by JPMorgan Chase Bank and other financial institutions, replaces the existing credit facilities and reduces the company’s funded debt by $200 million. The new credit facility, maturing in 2030, aims to reduce leverage, extend debt maturity, and offer financial flexibility, ultimately decreasing debt service costs.

The most recent analyst rating on (PENG) stock is a Buy with a $25.00 price target. To see the full list of analyst forecasts on Penguin Solutions stock, see the PENG Stock Forecast page.

Penguin Solutions Approves Redomiciling to United States

Penguin Solutions, Inc. held a Scheme Meeting on June 16, 2025, to vote on a Scheme of Arrangement for redomiciling the company from the Cayman Islands to the United States. The proposal was approved by 92.25% of the shares voted, surpassing the required 75% threshold, with 73.35% of outstanding shares participating.

The most recent analyst rating on (PENG) stock is a Buy with a $25.00 price target. To see the full list of analyst forecasts on Penguin Solutions stock, see the PENG Stock Forecast page.