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Penguin Solutions
(NASDAQ:PENG)
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Rating:57Neutral
Price Target:
$53.00
▼(-1.58% Downside)
Action:Reiterated
Date:07/18/26
The score is driven primarily by weakened financial quality due to the swing to negative operating and free cash flow, despite improving revenue/profitability and a healthier leverage profile. The latest earnings call is a meaningful positive (raised guidance and strong AI/integrated memory momentum), but technicals are mixed and valuation is relatively expensive (P/E ~41), which caps the overall score.
Positive Factors
AI-driven Revenue Mix
A structural shift to AI workloads now drives the bulk of revenue, creating higher baseline demand and deeper customer engagement. Large, repeatable AI deployments and platform wins increase revenue visibility and support scalable product roadmap investments over multiple planning cycles.
Negative Factors
Negative Operating & Free Cash Flow
A recent swing to cash burn, driven by working capital builds and higher inventories/AR, undermines self‑funding ability. Persistent negative cash flow increases reliance on external financing and heightens execution risk if revenue or margin trends moderate over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
AI-driven Revenue Mix
A structural shift to AI workloads now drives the bulk of revenue, creating higher baseline demand and deeper customer engagement. Large, repeatable AI deployments and platform wins increase revenue visibility and support scalable product roadmap investments over multiple planning cycles.
Read all positive factors
Penguin Solutions (PENG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.24B
Dividend YieldN/A
Average Volume (3M)4.33M
Price to Earnings (P/E)32.8
Beta (1Y)2.47
Revenue Growth11.97%
EPS GrowthN/A
CountryUS
Employees2,900
SectorTechnology
Sector Strength88
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)1.47
Shares Outstanding51,242,700
10 Day Avg. Volume4,433,821
30 Day Avg. Volume4,330,781
Financial Highlights & Ratios
PEG Ratio-0.65
Price to Book (P/B)2.15
Price to Sales (P/S)0.94
P/FCF Ratio12.82
Enterprise Value/Market Cap1.43
Enterprise Value/Revenue2.14
Enterprise Value/Gross Profit7.66
Enterprise Value/Ebitda19.54
Forecast
1Y Price Target
$71.00Price Target Upside31.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)2.61
Revenue Forecast (FY)$1.56B
Penguin Solutions Business Overview & Revenue Model
Company Description
Penguin Solutions (PENG) is a technology company that designs and delivers enterprise infrastructure and integrated systems used to deploy, run, and manage high-performance and data-intensive workloads, including AI and HPC. The company’s offering...
How the Company Makes Money
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Penguin Solutions Earnings Call Summary
Earnings Call Date:Jul 07, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Oct 13, 2026
Earnings Call Sentiment Positive
The call conveyed strong, broad-based execution driven by accelerating AI demand and a major surge in the Integrated Memory business, with record quarterly net sales, marked EPS upside and raised FY guidance. Strategic customer wins, partner recognitions and product momentum (ClusterWareAI, MemoryAI/CXL) reinforce the AI factory strategy. Key risks include margin pressure as pricing tailwinds moderate, a working-capital build that reduced cash and operating cash flow in the quarter, the planned wind down of the high-margin Penguin Edge business (which reduces reported growth), supply-chain and memory cost risks, and dilution from convertible debt. On balance, the positive operational and revenue momentum and the upgraded outlook materially outweigh the challenges highlighted.Positive Updates
Record Net Sales and Strong Quarter
Total net sales were a record $479 million in Q3 FY'26, up 48% year-over-year and up 40% sequentially.
Negative Updates
Gross Margin Pressure
Non-GAAP gross margin was 28.1% in Q3, down 3.6 percentage points year-over-year and down 3.1 points sequentially; management expects less pricing favorability in Q4 and some downward pressure on gross margins exiting the year.
Read all updates
Q3-2026 Updates
Positive
Negative
Record Net Sales and Strong Quarter
Total net sales were a record $479 million in Q3 FY'26, up 48% year-over-year and up 40% sequentially.
Read all positive updates
Company Guidance
Penguin raised its FY‑26 outlook, now targeting 22% net sales growth at the midpoint and $2.60 of non‑GAAP diluted EPS (up from prior guidance of 12% sales growth and $2.15 EPS); by segment it sees Advanced Computing down 15–20% YoY, Integrated Memory up 90–95% YoY, and LED down ~5% YoY. Full‑year non‑GAAP gross margin is guided to ~28.5% ±0.5 ppt, total non‑GAAP operating expenses to ~$260M ±$5M, a full‑year non‑GAAP diluted share count of ~56M (Q4 ~62M), and a non‑GAAP tax rate of ~20% (Q3 was 17.3%). The outlook excludes hyperscale Advanced Computing hardware sales and assumes the Penguin Edge wind‑down (together reducing FY‑26 growth by ~14 percentage points company‑wide and ~30 points in Advanced Computing). Management warned Q4 assumes less favorable memory pricing and some margin pressure, and gave a preliminary FY‑27 planning view of roughly 30% growth in both net sales and non‑GAAP EPS from the FY‑26 midpoint.Penguin Solutions Financial Statement Overview
Summary
Income Statement
64
Positive
Balance Sheet
62
Positive
Cash Flow
33
Negative
| Breakdown | TTM | Aug 2025 | Aug 2024 | Aug 2023 | Aug 2022 | Aug 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.50B | 1.37B | 1.17B | 1.44B | 1.40B | 1.06B |
| Gross Profit | 419.27M | 394.27M | 342.91M | 415.17M | 391.05M | 237.97M |
| EBITDA | 164.42M | 112.42M | 62.93M | 68.54M | 113.49M | 19.81M |
| Net Income | 96.61M | 21.58M | -52.47M | -187.53M | 66.56M | 21.31M |
Balance Sheet | ||||||
| Total Assets | 2.19B | 1.62B | 1.47B | 1.51B | 1.57B | 1.34B |
| Cash, Cash Equivalents and Short-Term Investments | 440.30M | 453.75M | 389.48M | 390.81M | 313.33M | 222.99M |
| Total Debt | 502.51M | 733.03M | 725.88M | 856.85M | 651.14M | 398.26M |
| Total Liabilities | 1.74B | 1.01B | 1.08B | 1.28B | 1.19B | 1.03B |
| Stockholders Equity | 439.06M | 595.96M | 391.38M | 222.47M | 371.61M | 310.25M |
Cash Flow | ||||||
| Free Cash Flow | -66.38M | 100.07M | 57.76M | 64.97M | 84.57M | 136.68M |
| Operating Cash Flow | -55.84M | 109.08M | 77.19M | 104.39M | 104.93M | 153.35M |
| Investing Cash Flow | 86.40M | 24.97M | 107.58M | -298.57M | -38.97M | -84.18M |
| Financing Cash Flow | -260.81M | -63.46M | -210.10M | 236.42M | 73.88M | 2.85M |
Penguin Solutions Technical Analysis
Neutral
53.85
Price Trends
62.33
Negative
44.54
Positive
32.40
Positive
Market Momentum
-1.42
Positive
40.93
Neutral
16.60
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PENG, the sentiment is Neutral. The current price of 53.85 is below the 20-day moving average (MA) of 63.14, below the 50-day MA of 62.33, and above the 200-day MA of 32.40, indicating a neutral trend. The MACD of -1.42 indicates Positive momentum. The RSI at 40.93 is Neutral, neither overbought nor oversold. The STOCH value of 16.60 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PENG.
Penguin Solutions Risk Analysis
Penguin Solutions disclosed 68 risk factors in its most recent earnings report. Penguin Solutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Penguin Solutions Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.08B | 6.43 | 2.61% | ― | 4.90% | ― | |
72 Outperform | $946.31M | 21.17 | 15.49% | ― | 10.87% | ― | |
68 Neutral | $1.34B | 58.22 | 8.01% | 0.15% | 8.63% | 141.02% | |
68 Neutral | $2.66B | 80.39 | 3.85% | 0.84% | 8.87% | 39.10% | |
67 Neutral | $3.36B | 60.04 | 12.97% | 0.10% | 25.26% | -2.96% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $2.24B | 32.79 | 17.37% | ― | 11.97% | ― |
* Technology Sector Average
PENG
Penguin Solutions
51.43
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118.20%
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Penguin Solutions Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Penguin Solutions Issues Zero-Coupon Convertible Notes and Refinances
Positive
Jul 18, 2026
On July 17, 2026, Penguin Solutions issued $750 million of 0.00% Convertible Senior Notes due 2031 in a private offering, generating about $735.1 million in net proceeds after discounts and expenses. The zero-coupon notes, convertible into cash an...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Penguin Solutions CFO Transition and Outlook Reaffirmation
Positive
Jun 1, 2026
Penguin Solutions, Inc. announced on June 1, 2026, that Senior Vice President and Chief Financial Officer Nate Olmstead will resign effective July 8, 2026, to pursue a role in another industry, with the company stating his departure is unrelated t...
Business Operations and StrategyExecutive/Board Changes
Penguin Solutions Appoints Nokia Executive to Board
Positive
May 18, 2026
On May 18, 2026, Penguin Solutions, Inc. expanded its board of directors to eight members and appointed David Heard, President of Network Infrastructure at Nokia, as a Class I director and member of the compensation committee, with a term running ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.