Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.06B
• Dividend Yield: N/A
• Average Volume (3M): 1.13M
• Price to Earnings (P/E): 91181.7
• Beta (1Y): 2.33
• Revenue Growth: 10.76%
• EPS Growth: N/A
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.49
• Shares Outstanding: 52,560,158
• 10 Day Avg. Volume: 954,236
• 30 Day Avg. Volume: 1,130,182
• PEG Ratio: -0.46
• Price to Book (P/B): 2.15
• Price to Sales (P/S): 0.94
• P/FCF Ratio: 12.82
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 0.84
• Enterprise Value/Gross Profit: 2.94
• Enterprise Value/Ebitda: 12.93
• 1Y Price Target: $26.00
• Price Target Upside: 26.89% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 2.04
• Revenue Forecast (FY): $1.46B

• Rating: 58 Neutral
• Price Target: $20.00 ▼(-2.39% Downside)
• Action: Reiterated Date: 02/12/26
• Date: Action: Reiterated 02/12/26

The score is driven primarily by improving fundamentals and strong free cash flow, partially offset by meaningful leverage and historical earnings volatility. Technicals remain weak (below key moving averages with negative MACD), while valuation is a major drag due to the extremely high P/E. Guidance was reaffirmed but includes notable headwinds (Penguin Edge wind-down, LED weakness, and timing/supply-chain risks).

Positive Factors

Strong free cash flow

Consistent, high free cash flow relative to earnings provides durable funding for R&D, capex and debt reduction. With FCF running near reported net income, Penguin can invest in AI/memory growth, buy back stock, and service liabilities without relying on external financing.

Rapid Integrated Memory growth

The high-growth Integrated Memory business materially shifts product mix toward memory demanded by AI and enterprise workloads. A 40% share and raised growth guidance signal structural diversification and an addressable market advantage that can sustain revenue and leverage scale over coming quarters.

Margin expansion and cost discipline

Sustained margin expansion and disciplined operating expenses indicate improving unit economics and better operating leverage. This trend enhances resilience to demand swings and supports reinvestment or deleveraging even if top-line growth is lumpy from large customer timing.

Negative Factors

Substantial leverage remains

Although leverage has improved, a ~$504M debt load limits financial flexibility if profits slip. With operating cash covering only a portion of debt and mixed earnings history, higher leverage increases refinancing, interest and covenant risk during cyclical downturns or prolonged margin pressure.

Wind‑down of high‑margin Penguin Edge

The planned exit of a previously high‑margin product and absence of hyperscale customers materially reduce near‑term revenue and increase reliance on other segments. This creates lumpy Advanced Computing results and forces management to replace lost high‑margin streams to sustain profit levels.

Working capital and demand fragility

Rising receivables and longer DSO reflect sales linearity issues and slower cash conversion, elevating short‑term funding needs. Combined with LED demand weakness and supply‑chain timing risks, this raises the chance of inventory/receivable stress that can compress margins or force slower deleveraging.

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-state and flash storage, and other advanced integrated memory solutions for networking and telecom, data analytics, artificial intelligence and machine learning applications; and supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging services. The company also provides Penguin Computing that focus on technical computing for core and cloud environments through high-performance computing and AI solutions; and Penguin Edge, an edge computing solution for embedded and wireless applications, such as high-performance products for government, health care, manufacturing, and telecommunications applications. In addition, it offers Stratus, which provides simplified, protected, and autonomous fault tolerant computing solutions in the data center and at the Edge through hardware and software services; and solutions to education, energy, financial services, government, hyperscale, and manufacturing markets. Further, the company provides LED chip products comprising blue and green LED chips based on gallium nitride, and related materials under Cree LED brand; and surface mount devices under the Cree LED XLamp and J Series brands. It sells its products directly to original equipment manufacturers, enterprise, government and other end customers through direct sales force, e-commerce, customer service representatives, on-site field application engineers, independent sales representatives, distributors, integrators, and resellers. The company was formerly known as SMART Global Holdings, Inc. and changed its name to Penguin Solutions, Inc. in October 2024. Penguin Solutions, Inc. was founded in 1988 and is based in Grand Cayman, Cayman Islands.

How the Company Makes Money

Penguin Solutions generates revenue through multiple streams: the sale of hardware components such as servers and storage systems, subscription fees for software solutions, and consulting services that assist clients in implementing and optimizing their IT infrastructures. Additionally, the company engages in strategic partnerships with other technology firms to co-develop solutions, which can lead to shared revenue opportunities. Ongoing support and maintenance contracts further contribute to stable, recurring revenue, while bespoke solutions for enterprise clients help to boost profit margins.

Penguin Solutions Financial Statement Overview

Summary

Financials show a rebound with ~14% TTM revenue growth, a return to profitability, and particularly strong cash generation (TTM operating cash flow ~$130M; free cash flow ~$122M). Offsetting this, earnings power remains thin/volatile after large recent-year losses, and the debt load is still meaningful (~$504M) despite improved leverage.

Income Statement

TTM (Trailing-Twelve-Months) results show a clear recovery: revenue grew ~14% with positive profitability (about 1.9% net margin and ~4.2% operating margin). Gross margin has been relatively steady around ~28–29% over time, suggesting a stable core product economics. Offsetting this, the company’s earnings power remains thin and volatile—large net losses in 2023 and 2024 preceded the current profit, and margins are still modest for the industry, leaving less room for execution missteps or demand swings.

Balance Sheet

Leverage has improved meaningfully versus prior years: debt-to-equity is ~0.88 in the latest periods compared with much higher levels in 2022–2023, and return on equity is now positive (~4.7% TTM (Trailing-Twelve-Months)) after being deeply negative during the loss years. However, the balance sheet still carries substantial debt (~$504M TTM (Trailing-Twelve-Months)) and equity declined versus the most recent annual figure, which reduces financial flexibility if profitability weakens again.

Cash Flow

Cash generation is a bright spot: TTM (Trailing-Twelve-Months) operating cash flow (~$130M) and free cash flow (~$122M) are strong relative to reported earnings, with free cash flow running at roughly 92% of net income. Free cash flow growth is also very strong in the TTM (Trailing-Twelve-Months) period, indicating improving cash conversion. The main drawback is that operating cash flow covers only about a quarter of total debt, so while cash flow is healthy, the company is not in a “low leverage” position.

Breakdown	TTM	Aug 2025	Aug 2024	Aug 2023	Aug 2022	Aug 2021
Income Statement
Total Revenue	1.37B	1.37B	1.17B	1.44B	1.40B	1.06B
Gross Profit	392.17M	394.27M	342.91M	415.17M	391.05M	237.97M
EBITDA	89.26M	112.42M	62.93M	68.54M	113.49M	19.81M
Net Income	25.21M	21.58M	-52.47M	-187.53M	66.56M	21.31M
Balance Sheet
Total Assets	1.60B	1.62B	1.47B	1.51B	1.57B	1.34B
Cash, Cash Equivalents and Short-Term Investments	461.45M	453.75M	389.48M	390.81M	313.33M	222.99M
Total Debt	523.71M	733.03M	725.88M	856.85M	651.14M	398.26M
Total Liabilities	993.73M	1.01B	1.08B	1.28B	1.19B	1.03B
Stockholders Equity	592.41M	595.96M	391.38M	222.47M	371.61M	310.25M
Cash Flow
Free Cash Flow	122.21M	100.07M	57.76M	64.97M	84.57M	136.68M
Operating Cash Flow	132.68M	109.08M	77.19M	104.39M	104.93M	153.35M
Investing Cash Flow	40.85M	24.97M	107.58M	-298.57M	-38.97M	-84.18M
Financing Cash Flow	-73.51M	-63.46M	-210.10M	236.42M	73.88M	2.85M

Penguin Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 20.49
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• 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 20.49 is above the 20-day moving average (MA) of 19.15, above the 50-day MA of 19.65, and below the 200-day MA of 21.67, indicating a neutral trend. The MACD of 0.12 indicates Negative momentum. The RSI at 58.82 is Neutral, neither overbought nor oversold. The STOCH value of 85.72 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
BELFB	76 Outperform	$2.93B	50.57	15.66%	0.16%	23.70%	14.78%
ALNT	72 Outperform	$1.14B	60.39	6.58%	0.22%	-2.88%	26.14%
ROG	68 Neutral	$1.93B	-32.82	-5.34%	―	-4.87%	-235.48%
BHE	66 Neutral	$2.13B	87.04	3.37%	1.44%	-2.93%	-40.33%
DAKT	66 Neutral	$1.33B	199.63	2.64%	―	-6.13%	-76.92%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PENG	58 Neutral	$1.06B	91,181.66	4.85%	―	10.76%	―

Penguin Solutions Corporate Events

Penguin Solutions Shareholders Back Governance and Board Continuity

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 Papermaster as a Class I director to serve until the 2029 annual meeting, and ratified the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year ending August 28, 2026.

Investors also approved, on a non-binding advisory basis, the compensation of the company’s named executive officers, indicating broad support for the current executive pay structure. The voting outcomes collectively reinforce the company’s existing governance framework and leadership, signaling continuity in oversight, audit relationships, and compensation policies for stakeholders.

The most recent analyst rating on (PENG) stock is a Buy with a $27.00 price target. To see the full list of analyst forecasts on Penguin Solutions stock, see the PENG Stock Forecast page.

Penguin Solutions Appoints Kash Shaikh as New CEO

On February 2, 2026, Penguin Solutions announced that Mark Adams retired as president, chief executive officer and director, following a five-year tenure during which he unified the company’s businesses under the Penguin Solutions brand, expanded its portfolio and market reach, and positioned it as a key partner for critical AI infrastructure; he will remain as an advisor for nine months under a transition agreement that provides consulting fees and continued vesting of certain equity awards. The board has appointed technology veteran Kash Shaikh as president, CEO, principal executive officer and Class III director effective February 2, 2026, with a compensation package heavily weighted toward performance-based equity tied to relative total shareholder return and share price appreciation, signaling an emphasis on growth, disciplined execution and shareholder value as the company seeks to capitalize on accelerating enterprise demand for production-scale AI infrastructure.

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.

Penguin Solutions to Divest Remaining Stake in Zilia

On December 29, 2025, SMART Modular Technologies (LX) S.à r.l., an indirect subsidiary of Penguin Solutions, agreed to sell its remaining 19% stake in Brazilian electronic components maker Zilia Technologies to Lexar Europe B.V. for $46.08 million, a deal that will make Zilia a wholly owned subsidiary of the buyer and terminate the existing quotaholders’ agreement signed in November 2023. The transaction, which follows Lexar’s November 2023 purchase of the other 81% stake in Zilia, is expected to close remotely by March 30, 2026, or by April 28, 2026 if required approvals are delayed, and will complete Penguin’s exit from Zilia, potentially streamlining its portfolio while consolidating ownership of Zilia under the Lexar/Longsys corporate group.

The most recent analyst rating on (PENG) stock is a Hold with a $23.50 price target. To see the full list of analyst forecasts on Penguin Solutions stock, see the PENG Stock Forecast page.