Penguin Solutions (PENG)
NASDAQ:PENG
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Penguin Solutions
(NASDAQ:PENG)
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Rating:68Neutral
Price Target:
$40.00
▲(49.59% Upside)
Action:DowngradedDate:05/07/26
Score reflects improving financial performance (return to profitability and strong free cash flow) and constructive earnings-call signals (raised FY guidance and strong Integrated Memory demand), balanced by leverage and mixed growth. Technicals are supportive but appear overextended, while the low P/E provides a valuation cushion.
Positive Factors
Strong free cash flow and liquidity
Consistent positive FCF (~$109M TTM) and high cash conversion indicate durable internal funding for R&D, product launches, buybacks, and debt reduction. This cash-generation ability improves financial flexibility across cycles and supports execution of a multi-quarter AI-focused pivot without immediate external financing.
Negative Factors
Elevated leverage for a cyclical hardware firm
Maintaining debt above equity leaves less financial flexibility during cyclical downturns in hardware demand. Interest and covenant exposure can constrain capital allocation choices, slow strategic investments if headwinds worsen, and increase refinancing or liquidity risk over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow and liquidity
Consistent positive FCF (~$109M TTM) and high cash conversion indicate durable internal funding for R&D, product launches, buybacks, and debt reduction. This cash-generation ability improves financial flexibility across cycles and supports execution of a multi-quarter AI-focused pivot without immediate external financing.
Read all positive factors
Penguin Solutions (PENG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.98B
Dividend YieldN/A
Average Volume (3M)1.23M
Price to Earnings (P/E)7.3
Beta (1Y)2.32
Revenue Growth2.27%
EPS GrowthN/A
CountryUS
Employees2,700
SectorTechnology
Sector Strength88
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)0.73
Shares Outstanding50,747,510
10 Day Avg. Volume1,455,105
30 Day Avg. Volume1,228,803
Financial Highlights & Ratios
PEG Ratio-0.46
Price to Book (P/B)2.15
Price to Sales (P/S)0.94
P/FCF Ratio12.82
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue1.58
Enterprise Value/Gross Profit5.57
Enterprise Value/Ebitda19.28
Forecast
1Y Price Target
$27.00Price Target Upside0.97% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)2.19
Revenue Forecast (FY)$1.54B
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...
How the Company Makes Money
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Penguin Solutions Earnings Call Summary
Earnings Call Date:Apr 01, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Jul 14, 2026
Earnings Call Sentiment Positive
Overall the call conveys a constructive and strategic pivot toward AI inference and memory solutions with strong demand and product momentum in the Integrated Memory business, raised full-year guidance, and meaningful new product launches and customer wins. However, material near-term challenges remain — notably a sharp decline in Advanced Computing revenue (driven by the Penguin Edge wind-down and lower hyperscaler sales), higher inventory and working capital needs, supply-chain and memory cost pressures, and an anticipated gross margin compression in H2. On balance, the positive developments (robust memory growth, upgraded guidance, product innovation and bookings momentum) outweigh the near-term headwinds, but execution on supply and timely conversion of bookings into revenue will be critical.Positive Updates
Raised Full-Year Guidance
Company raised full-year midpoint outlook to 12% net sales growth and $2.15 non-GAAP diluted EPS (up from prior 6% net sales growth and $2.00 EPS), reflecting stronger-than-expected results and an improved memory outlook.
Negative Updates
Overall Revenue Decline
Total net sales for Q2 were $343M, down 6% year-over-year, reflecting timing of deployments and product mix shifts.
Read all updates
Q2-2026 Updates
Positive
Negative
Raised Full-Year Guidance
Company raised full-year midpoint outlook to 12% net sales growth and $2.15 non-GAAP diluted EPS (up from prior 6% net sales growth and $2.00 EPS), reflecting stronger-than-expected results and an improved memory outlook.
Read all positive updates
Company Guidance
Penguin raised its FY‑26 midpoint outlook to 12% net sales growth (from 6%) and $2.15 non‑GAAP diluted EPS (from $2.00), with full‑year non‑GAAP gross margin guidance of 28% ±0.5ppt, non‑GAAP operating expenses of $250M ±$5M, an expected non‑GAAP diluted share count of ~53M, a non‑GAAP tax rate of 22% and an EPS sensitivity of ±$0.15; by segment the company now expects Advanced Computing net sales to be down 25%–15% YoY, Integrated Memory to grow 65%–75% YoY, and LED to decline 15%–5% YoY. The outlook assumes no hyperscaler advanced‑computing hardware sales, a wind‑down of Penguin Edge by year‑end (together creating ~14ppt headwind to total net‑sales growth and ~30ppt to Advanced Computing), and reflects a 1ppt gross‑margin reduction to account for higher memory mix and costs, with modest H2 OpEx increases to fund R&D (ClusterWare, MemoryAI).Penguin Solutions Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
54
Neutral
Cash Flow
66
Positive
| Breakdown | TTM | Aug 2025 | Aug 2024 | Aug 2023 | Aug 2022 | Aug 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.35B | 1.37B | 1.17B | 1.44B | 1.40B | 1.06B |
| Gross Profit | 381.14M | 394.27M | 342.91M | 415.17M | 391.05M | 237.97M |
| EBITDA | 110.20M | 112.42M | 62.93M | 68.54M | 113.49M | 19.81M |
| Net Income | 54.58M | 21.58M | -52.47M | -187.53M | 66.56M | 21.31M |
Balance Sheet | ||||||
| Total Assets | 1.75B | 1.62B | 1.47B | 1.51B | 1.57B | 1.34B |
| Cash, Cash Equivalents and Short-Term Investments | 489.17M | 453.75M | 389.48M | 390.81M | 313.33M | 222.99M |
| Total Debt | 564.28M | 733.03M | 725.88M | 856.85M | 651.14M | 398.26M |
| Total Liabilities | 1.14B | 1.01B | 1.08B | 1.28B | 1.19B | 1.03B |
| Stockholders Equity | 597.52M | 595.96M | 391.38M | 222.47M | 371.61M | 310.25M |
Cash Flow | ||||||
| Free Cash Flow | 109.47M | 100.07M | 57.76M | 64.97M | 84.57M | 136.68M |
| Operating Cash Flow | 114.76M | 109.08M | 77.19M | 104.39M | 104.93M | 153.35M |
| Investing Cash Flow | 75.47M | 24.97M | 107.58M | -298.57M | -38.97M | -84.18M |
| Financing Cash Flow | -313.86M | -63.46M | -210.10M | 236.42M | 73.88M | 2.85M |
Penguin Solutions Technical Analysis
Positive
26.74
Price Trends
19.66
Positive
19.87
Positive
21.77
Positive
Market Momentum
2.05
Negative
78.69
Negative
92.19
Negative
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 26.74 is above the 20-day moving average (MA) of 20.85, above the 50-day MA of 19.66, and above the 200-day MA of 21.77, indicating a bullish trend. The MACD of 2.05 indicates Negative momentum. The RSI at 78.69 is Negative, neither overbought nor oversold. The STOCH value of 92.19 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $3.59B | 53.78 | 9.96% | 0.16% | 25.54% | 17.25% | |
68 Neutral | $1.98B | 7.25 | 9.21% | ― | 2.27% | ― | |
66 Neutral | $969.34M | 93.63 | 9.64% | ― | 0.36% | 1138.56% | |
64 Neutral | $1.32B | 46.09 | 7.61% | 0.22% | 4.62% | 65.35% | |
63 Neutral | $2.51B | 109.72 | -4.66% | ― | 1.68% | -431.99% | |
62 Neutral | $3.11B | 38.49 | 3.10% | 1.44% | 3.53% | -34.92% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
PENG
Penguin Solutions
38.99
21.14
118.43%
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Penguin Solutions Corporate Events
Business Operations and StrategyM&A Transactions
Penguin Solutions Completes Strategic Exit from Brazilian Operations
Positive
Apr 1, 2026
On March 30, 2026, Penguin Solutions’ indirect subsidiary SMART Modular Technologies (LX) S.à r.l. sold its remaining 19% interest in Brazil-based Zilia Technologies to Lexar Europe B.V. for $46.08 million, completing a staged exit that...
Executive/Board ChangesShareholder Meetings
Penguin Solutions Shareholders Back Governance and Board Continuity
Positive
Feb 11, 2026
Penguin Solutions, Inc. held its 2026 Annual Meeting of Stockholders on February 6, 2026, with approximately 86.3% of the company’s voting power represented, reflecting strong shareholder engagement. At the meeting, stockholders elected Mark...
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.