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Penguin Solutions (PENG)
NASDAQ:PENG
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Penguin Solutions
(NASDAQ:PENG)
Rating:71Outperform
Price Target:
$21.50
▲(9.47%Upside)
Positive Factors
Earnings
The company reported well ahead of expectations for F2Q25 results, with revenue significantly surpassing consensus estimates.
Growth Outlook
The company raised the lower end of the guidance range for both FY25 revenue and earnings, indicating confidence in further growth.
Strategic Partnerships
Strategic partnerships, such as with Dell and SK Telecom, are progressing and creating new customer opportunities.
Negative Factors
Advanced Compute Segment
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 (PENG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.02B
Dividend YieldN/A
Average Volume (3M)577.83K
Price to Earnings (P/E)―
Beta (1Y)2.14
Revenue Growth4.71%
EPS Growth95.60%
CountryUS
Employees2,700
SectorTechnology
Sector Strength84
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)0.52
Shares Outstanding52,756,645
10 Day Avg. Volume634,705
30 Day Avg. Volume577,828
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)4.30
Price to Sales (P/S)0.00
P/FCF Ratio14.72
Enterprise Value/Market Cap1.42
Enterprise Value/Revenue0.30
Enterprise Value/Gross Profit3.83
Enterprise Value/Ebitda4.66
Forecast
1Y Price Target
$24.67Price Target Upside25.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Penguin Solutions Business Overview & Revenue Model
Company DescriptionPenguin Solutions (PENG) is a technology company specializing in providing advanced computing solutions to enterprises and organizations across various sectors. The company focuses on delivering high-performance computing (HPC) systems, data analytics, and artificial intelligence (AI) solutions designed to enhance operational efficiency and drive innovation. Penguin Solutions caters to industries such as scientific research, finance, and engineering, among others, offering tailored services and products that meet specific client needs.
How the Company Makes MoneyPenguin 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 Earnings Call Summary
Earnings Call Date:Apr 02, 2025
(Q2-2025)
| % Change Since: 8.81%|
Next Earnings Date:Jun 26, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance in the first half of the year with significant revenue and earnings growth, particularly in the Advanced Computing and Integrated Memory segments. The company raised its full-year outlook, demonstrating confidence in its strategic direction and partnerships. However, challenges remain in the LED segment due to tariffs and flat revenue, and there is an expected decline in the second half revenues. Overall, the positive aspects and growth initiatives outweigh the challenges.Q2-2025 Updates
Positive Updates
Significant Revenue Growth
Penguin Solutions reported a revenue of $366 million for Q2 fiscal 2025, marking a 28% increase compared to the same period last year.
Impressive Non-GAAP Earnings Per Share
The company achieved non-GAAP earnings per share of $0.52, representing a 97% increase year-over-year.
Advanced Computing Segment Success
Advanced Computing revenue reached $200 million, up 42% year-over-year, accounting for 55% of Penguin Solutions' total revenue.
Positive Outlook for Full Year
The company raised its full-year revenue outlook growth from 15% to 17% year-over-year, indicating strong confidence in future performance.
Strong Performance in Integrated Memory
Integrated Memory reported $105 million in revenue, up 26% from the previous year, and represented 29% of total revenue.
Strategic Partnerships and Expansion
Penguin Solutions expanded its market reach through partnerships with companies like Dell and SK Telecom, enhancing growth opportunities.
Negative Updates
Flat Revenue in Optimized LED Segment
The Optimized LED segment reported flat revenue compared to the year-ago quarter, indicating a lack of growth in this area.
Impact of Tariffs on LED Segment
Higher tariffs continue to affect the LED business, impacting profitability despite improved margins.
Anticipated Second Half Revenue Decline
Despite a strong first half, the company expects lower revenues and profits in the second half due to the timing of Advanced Computing orders.
Company Guidance
During the Q2 fiscal 2025 earnings call for Penguin Solutions, the company provided updated guidance and key metrics reflecting strong financial performance and strategic advancements. Revenue for the quarter was reported at $366 million, marking a 28% year-over-year increase. The non-GAAP gross margin stood at 30.8%, while non-GAAP operating income reached $49 million, representing an 85% increase from the previous year. The non-GAAP earnings per share were $0.52, up 97% year-over-year. In light of these results, Penguin Solutions raised its full-year fiscal 2025 revenue growth outlook from 15% to 17%, driven by strong performance in the Advanced Computing segment, which saw a 42% year-over-year increase to $200 million. The Integrated Memory segment recorded $105 million in revenue, a 26% increase, and the Optimized LED segment remained flat year-over-year at $60 million. The company emphasized its commitment to its strategic focus on AI infrastructure, leveraging partnerships, and expanding its go-to-market strategy to support long-term growth.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.65
Positive
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.70
Positive
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.75
Positive
| 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 | EBIT |
| 56.15M | 18.30M | 8.74M | 67.18M | -15.71M | 41.33M | EBITDA |
| 94.22M | 62.93M | 68.54M | 113.49M | 19.81M | 60.79M | Net Income Common Stockholders |
| -5.63M | -52.47M | -187.53M | 66.56M | 21.31M | -1.14M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 647.00M | 389.48M | 390.81M | 313.33M | 222.99M | 150.81M | Total Assets |
| 1.81B | 1.47B | 1.51B | 1.57B | 1.34B | 786.61M | Total Debt |
| 715.61M | 717.89M | 856.85M | 651.14M | 398.26M | 221.71M | Net Debt |
| 93.92M | 334.74M | 491.28M | 337.81M | 175.27M | 70.89M | 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
Positive
19.64
Price Trends
17.89
Positive
18.61
Positive
18.69
Positive
Market Momentum
0.48
Negative
57.97
Neutral
38.54
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 19.64 is above the 20-day moving average (MA) of 18.91, above the 50-day MA of 17.89, and above the 200-day MA of 18.69, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 57.97 is Neutral, neither overbought nor oversold. The STOCH value of 38.54 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 67 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
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $485.17M | 22.63 | 10.42% | 1.24% | 17.89% | -23.37% | |
74 Outperform | $1.25B | 21.15 | 11.39% | 0.38% | -2.76% | 16.64% | |
72 Outperform | $1.11B | 23.28 | 11.87% | 0.31% | -6.15% | -42.24% | |
71 Outperform | $1.02B | ― | -1.21% | ― | 4.71% | 95.60% | |
66 Neutral | $846.47M | ― | -0.34% | ― | -4.76% | 97.93% | |
62 Neutral | $11.96B | 10.09 | -7.50% | 3.10% | 7.33% | -8.11% | |
51 Neutral | $524.21M | ― | -1.29% | 0.67% | 11.68% | -26360.70% |
* Technology Sector Average
Performance Comparison
PENG
Penguin Solutions
19.64
-3.98
-16.85%
CTS
CTS
41.48
-9.31
-18.33%
FARO
Faro Technologies
43.78
27.16
163.42%
LYTS
Lsi Industries
16.10
1.62
11.19%
MLAB
Mesa Laboratories
92.73
1.93
2.13%
BELFA
Bel Fuse
79.76
-3.37
-4.05%
Penguin Solutions Corporate Events
Delistings and Listing ChangesShareholder Meetings
Penguin Solutions Approves Redomiciling to United States
Positive
Jun 17, 2025
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.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Penguin Solutions Announces COO Retirement and Revenue Surge
Positive
Apr 2, 2025
On April 1, 2025, Penguin Solutions announced the planned retirement of Jack Pacheco, the COO and President of Integrated Memory, effective December 31, 2025. The company has entered into a transition agreement with Mr. Pacheco to ensure a smooth transition of responsibilities. Additionally, Penguin Solutions reported a significant 28% increase in revenue for the second quarter of fiscal 2025, with net sales reaching $366 million. The company has raised its annual revenue outlook, reflecting confidence in its operational capabilities and market positioning.
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.