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Penguin Solutions (PENG)
NASDAQ:PENG

Penguin Solutions (PENG) AI Stock Analysis

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Penguin Solutions

(NASDAQ:PENG)

Rating:71Outperform
Price Target:
$21.50
▲(1.46%Upside)
Penguin Solutions scores a 71, driven by strong earnings call insights and technical momentum, offset by poor valuation metrics and profitability challenges. The company's strategic initiatives and revenue growth are strong positives, while the negative P/E ratio and lack of dividend yield present valuation concerns.
Positive Factors
Earnings
The company reported well ahead of expectations for F2Q25 results, with revenue significantly surpassing consensus estimates.
Guidance
The company raised the lower end of the guidance range for both FY25 revenue and earnings, indicating confidence in further growth.
Partnerships
Strategic partnerships, such as with Dell and SK Telecom, are progressing and creating new customer opportunities.
Negative Factors
Advanced Compute Sales
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)

Penguin Solutions Business Overview & Revenue Model

Company DescriptionPenguin 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 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:Jul 08, 2025
(Q3-2025)
|
% Change Since: 0.00%|
Next Earnings Date:Oct 02, 2025
Earnings Call Sentiment Positive
Penguin Solutions delivered a solid performance in Q3 Fiscal Year 2025, with notable revenue and earnings per share growth, alongside successful new customer acquisitions and strategic partnerships. Despite some revenue declines in the Advanced Computing segment and challenges in the LED segment due to tariffs, the company's overall financial health and strategic direction remain positive.
Q3-2025 Updates
Positive Updates
Revenue Growth
Penguin Solutions reported revenue of $324 million for Q3 Fiscal Year 2025, marking a 7.9% increase compared to the same period in Fiscal Year 2024.
Earnings Per Share Increase
Non-GAAP diluted earnings per share increased by 25% year over year to 47¢.
Operating Income Growth
Non-GAAP operating income rose by 15% from the prior year, reaching $38 million, with an operating income margin of 11.9%.
Integrated Memory Segment Growth
The Integrated Memory segment achieved $130 million in revenue, a 24% increase from the prior quarter.
New Customer Bookings
Penguin Solutions secured five new customer bookings, indicating strong market interest in its products and services.
Partnership with SK Telecom
The partnership with SK Telecom is progressing well, with early wins related to AI data center infrastructure initiatives.
Refinancing and Balance Sheet Strengthening
Completed refinancing of a $400 million credit facility, reducing gross leverage and extending debt maturity.
Negative Updates
Advanced Computing Revenue Decline
Advanced Computing revenue was $132 million, down compared to the prior quarter due to the timing of major deployments.
LED Segment Constraints
Cree LED revenue faced constraints due to increased costs and uncertainty related to tariffs on products from the China facility.
Gross Margin Slight Decline
Non-GAAP gross margin was 31.7%, down 0.6 percentage points year over year, primarily due to a higher mix of integrated memory net sales.
Company Guidance
During the third quarter of fiscal year 2025, Penguin Solutions reported a revenue of $324 million, reflecting a 7.9% increase from the same period in fiscal year 2024. The company's non-GAAP gross margin was 31.7%, and non-GAAP diluted earnings per share (EPS) rose by 25% year over year to $0.47. Non-GAAP operating income reached $38 million, up 15% from the previous year, resulting in a non-GAAP operating income margin of 11.9%. The company reaffirmed its full-year revenue growth outlook of 17% at the midpoint and raised its non-GAAP diluted EPS outlook from $1.60 to $1.80 per share at the midpoint. Advanced computing revenue for the quarter was $132 million, while integrated memory revenue grew by 24% to $130 million compared to the prior quarter, and optimized LED revenue was $62 million. Additionally, the company's cash and cash equivalents and short-term investments totaled $736 million at the end of the quarter, with a positive cash flow from operating activities of $97 million.

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
65
Positive
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
70
Positive
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
75
Positive
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.
BreakdownTTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue1.32B1.17B1.44B1.40B1.06B1.12B
Gross Profit378.53M342.91M415.17M391.05M237.97M216.40M
EBITDA94.22M62.93M68.54M113.49M19.81M60.79M
Net Income-5.63M-52.47M-187.53M66.56M21.31M-1.14M
Balance Sheet
Total Assets1.81B1.47B1.51B1.57B1.34B786.61M
Cash, Cash Equivalents and Short-Term Investments647.00M389.48M390.81M313.33M222.99M150.81M
Total Debt715.61M717.89M856.85M651.14M398.26M221.71M
Total Liabilities1.20B1.08B1.28B1.19B1.03B504.50M
Stockholders Equity602.53M391.38M222.47M371.61M310.25M282.10M
Cash Flow
Free Cash Flow140.58M57.76M64.97M84.57M136.68M54.76M
Operating Cash Flow154.32M77.19M104.39M104.93M153.35M87.20M
Investing Cash Flow-26.48M107.58M-298.57M-38.97M-84.18M-32.04M
Financing Cash Flow51.90M-210.10M236.42M73.88M2.85M12.59M

Penguin Solutions Technical Analysis

Technical Analysis Sentiment
Positive
Last Price21.19
Price Trends
50DMA
18.95
Positive
100DMA
18.62
Positive
200DMA
18.77
Positive
Market Momentum
MACD
0.54
Negative
RSI
66.98
Neutral
STOCH
71.66
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 21.19 is above the 20-day moving average (MA) of 20.13, above the 50-day MA of 18.95, and above the 200-day MA of 18.77, indicating a bullish trend. The MACD of 0.54 indicates Negative momentum. The RSI at 66.98 is Neutral, neither overbought nor oversold. The STOCH value of 71.66 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$528.68M24.6610.42%1.14%17.89%-23.37%
73
Outperform
$1.24B25.8711.87%0.27%-6.15%-42.24%
CTCTS
73
Outperform
$1.29B21.7711.39%0.37%-2.76%16.64%
71
Outperform
$1.10B-1.21%4.71%95.60%
63
Neutral
$33.76B6.14-11.84%1.84%5.29%-18.23%
62
Neutral
$848.20M-0.34%-4.76%97.93%
48
Neutral
$507.03M-1.29%0.69%11.47%99.25%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PENG
Penguin Solutions
21.19
-8.13
-27.73%
CTS
CTS
43.23
-6.25
-12.63%
FARO
Faro Technologies
43.89
27.34
165.20%
LYTS
Lsi Industries
17.66
3.72
26.69%
MLAB
Mesa Laboratories
92.02
-1.62
-1.73%
BELFA
Bel Fuse
93.30
11.24
13.70%

Penguin Solutions Corporate Events

Private Placements and Financing
Penguin Solutions Secures $400M Credit Facility
Positive
Jun 26, 2025

On June 24, 2025, Penguin Solutions, Inc. completed a refinancing of its credit facilities by establishing a $400 million revolving credit facility, which includes a $35 million letter of credit subfacility. This move, led by JPMorgan Chase Bank and other financial institutions, replaces the existing credit facilities and reduces the company’s funded debt by $200 million. The new credit facility, maturing in 2030, aims to reduce leverage, extend debt maturity, and offer financial flexibility, ultimately decreasing debt service costs.

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.

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.

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.Date of analysis: Jun 27, 2025