Penguin Solutions, Inc. (PENG)
NASDAQ:PENG
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Penguin Solutions
(NASDAQ:PENG)
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Rating:65Neutral
Price Target:
$65.00
▲(143.08% Upside)
Action:Reiterated
Date:06/02/26
The score is driven primarily by improving fundamentals with solid free-cash-flow generation, supported by strong price momentum above all key moving averages. These positives are tempered by high valuation (P/E ~53) and ongoing business/operational risks flagged in guidance, including Advanced Computing weakness, inventory build, and expected gross-margin pressure.
Positive Factors
Strong free cash flow generation
Consistent positive free cash flow near $109M and FCF that tracks earnings (~0.93x) supports durable financial flexibility. This underpins ongoing R&D, inventory purchases for memory strategy, buybacks and debt reduction without relying on volatile capital markets, improving resilience.
Negative Factors
Elevated leverage compared with peers
Debt exceeding equity increases financial rigidity for a cyclical hardware business, limiting capacity to fund large inventory builds or absorb demand shocks without higher interest costs. Though improved from 2023, sustained leverage elevates refinancing and operating risk during downturns.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Consistent positive free cash flow near $109M and FCF that tracks earnings (~0.93x) supports durable financial flexibility. This underpins ongoing R&D, inventory purchases for memory strategy, buybacks and debt reduction without relying on volatile capital markets, improving resilience.
Read all positive factors
Penguin Solutions (PENG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.41B
Dividend YieldN/A
Average Volume (3M)3.49M
Price to Earnings (P/E)64.3
Beta (1Y)2.41
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. Volume2,822,518
30 Day Avg. Volume3,492,914
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 Cap0.94
Enterprise Value/Revenue2.38
Enterprise Value/Gross Profit8.43
Enterprise Value/Ebitda26.12
Forecast
1Y Price Target
$42.00Price Target Upside57.07% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)2.23
Revenue Forecast (FY)$1.56B
Penguin Solutions Business Overview & Revenue Model
Company Description
Penguin Solutions, Inc. is a global technology company focused on designing and delivering advanced enterprise solutions. Its business operations are segmented into three primary divisions: Advanced Computing, Integrated Memory, and Optimized LED....
How the Company Makes Money
null...
Penguin Solutions Earnings Call Summary
Earnings Call Date:Apr 01, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Jul 07, 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 | 122.95M | 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 | 105.01M | 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
44.92
Positive
31.88
Positive
27.01
Positive
Market Momentum
5.30
Positive
63.86
Neutral
46.03
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 26.74 is below the 20-day moving average (MA) of 60.92, below the 50-day MA of 44.92, and below the 200-day MA of 27.01, indicating a bullish trend. The MACD of 5.30 indicates Positive momentum. The RSI at 63.86 is Neutral, neither overbought nor oversold. The STOCH value of 46.03 is Neutral, 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 | $4.15B | 66.58 | 12.97% | 0.16% | 25.54% | 17.25% | |
67 Neutral | $1.63B | 67.22 | 8.01% | 0.22% | 8.63% | 141.02% | |
66 Neutral | $1.00B | 36.71 | 9.64% | ― | 0.36% | 1138.56% | |
65 Neutral | $3.41B | 64.32 | 9.21% | ― | 2.27% | ― | |
64 Neutral | $3.31B | 96.30 | 3.10% | 1.44% | 3.53% | -34.92% | |
64 Neutral | $2.90B | -53.55 | -4.66% | ― | 1.68% | -431.99% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
PENG
Penguin Solutions
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242.78%
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Penguin Solutions Corporate Events
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 ...
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...
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.