Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.03B
• Dividend Yield: N/A
• Average Volume (3M): 546.27K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.14
• Revenue Growth: 4.71%
• EPS Growth: 95.60%
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 84
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.52
• Shares Outstanding: 52,756,645
• 10 Day Avg. Volume: 534,534
• 30 Day Avg. Volume: 546,267
• PEG Ratio: -2.44
• Price to Book (P/B): 1.56
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.61
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $24.67
• Price Target Upside: 24.16% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 64 Neutral
• Price Target: $19.50 ▼(-1.86%Downside)

Penguin Solutions' overall score is driven by strong revenue and earnings growth, particularly in key segments, and a positive strategic outlook. However, profitability issues and valuation concerns weigh down the score. Technical analysis suggests mixed market sentiment, further cautioning investors.

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 Business Overview & Revenue Model

Company Description

Penguin 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 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 demonstrates solid revenue growth and strong cash flow management, indicating robust sales and effective cash utilization. However, the company faces challenges with profitability due to ongoing net losses, which impacts overall financial performance negatively.

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
	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

• Technical Analysis Sentiment: Positive
• Last Price: 19.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 19.87 is above the 20-day moving average (MA) of 18.73, above the 50-day MA of 17.55, and above the 200-day MA of 18.71, indicating a bullish trend. The MACD of 0.42 indicates Negative momentum. The RSI at 64.88 is Neutral, neither overbought nor oversold. The STOCH value of 85.38 is Negative, 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
LYTS	77 Outperform	$487.87M	22.75	10.42%	1.23%	17.89%	-23.37%
BELFA	73 Outperform	$951.05M	19.19	11.87%	0.36%	-6.15%	-42.24%
CTS	72 Outperform	$1.25B	21.16	11.39%	0.38%	-2.76%	16.64%
FARO	66 Neutral	$815.58M	―	-0.34%	―	-4.76%	97.93%
PENG	64 Neutral	$1.03B	―	-1.21%	―	4.71%	95.60%
Sector *	62 Neutral	$11.80B	10.31	-7.45%	2.91%	7.43%	-7.78%
MLAB	51 Neutral	$567.31M	―	-1.29%	0.61%	11.68%	-26360.70%

Penguin Solutions Corporate Events

Penguin Solutions Announces COO Retirement and Revenue Surge

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.