Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.18B
• Dividend Yield: N/A
• Average Volume (3M): 1.41M
• Price to Earnings (P/E): 77758.4
• Beta (1Y): 2.34
• Revenue Growth: 16.91%
• EPS Growth: N/A
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.43
• Shares Outstanding: 52,859,337
• 10 Day Avg. Volume: 975,778
• 30 Day Avg. Volume: 1,412,300
• 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: 1.36
• Enterprise Value/Revenue: 1.17
• Enterprise Value/Gross Profit: 4.06
• Enterprise Value/Ebitda: 15.69
• 1Y Price Target: $26.50
• Price Target Upside: 18.99% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 57 Neutral
• Price Target: $23.50 ▲(5.52% Upside)

Penguin Solutions' overall stock score reflects moderate financial performance with room for improvement in profitability and operational efficiency. The technical analysis indicates a bearish trend, while the valuation suggests overvaluation. However, strong earnings growth and strategic advancements provide a positive outlook, despite future challenges.

Positive Factors

Revenue Growth

The 17% revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial health and market position.

Strategic Partnerships

Strategic partnerships with leading tech companies enhance product offerings and market reach, providing a competitive edge and supporting sustainable growth.

Cash Generation

Strong cash generation relative to net income ensures financial flexibility, supporting investments in growth initiatives and operational stability.

Negative Factors

Penguin Edge Business Wind Down

The wind-down of Penguin Edge reduces revenue streams, potentially impacting overall growth and necessitating strategic adjustments to offset losses.

No Hardware Sales to Hyperscale Customers

Lack of sales to hyperscale customers limits market opportunities, affecting revenue potential and requiring diversification to mitigate impact.

Profitability Concerns

Low return on equity indicates challenges in generating profits from shareholder investments, potentially hindering long-term financial performance.

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. Its primary revenue model is based on the sale of high-performance computing hardware, which includes servers and specialized processors designed for data-intensive applications. Additionally, the company offers software solutions that facilitate data analysis and machine learning, contributing to its earnings through licensing fees and subscriptions. Consulting services also represent a significant revenue stream, where PENG collaborates with clients to optimize their data strategies and implement tailored solutions. Moreover, strategic partnerships with technology providers and research institutions further enhance its market reach and lead to joint ventures that can boost revenue through collaborative projects.

Penguin Solutions Financial Statement Overview

Summary

Penguin Solutions demonstrates moderate financial health with improvements in revenue growth and profitability margins. The balance sheet shows reduced leverage, but profitability relative to equity remains a concern. Cash flow metrics indicate strong cash generation, though conversion of income to cash needs attention. Overall, the company is on a positive trajectory but must focus on enhancing operational efficiency and profitability.

Income Statement

Penguin Solutions shows a modest revenue growth of 1.995% in the TTM, with a gross profit margin of 28.81% and a net profit margin of 1.85%. The EBIT margin is 4.25%, and the EBITDA margin is 7.46%. While profitability metrics have improved from previous periods, the overall margins remain relatively low, indicating room for improvement in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved to 1.28 from previous years, indicating a reduction in leverage. However, the return on equity is low at 5.12%, suggesting limited profitability relative to shareholder equity. The equity ratio stands at 36.85%, reflecting a moderate level of financial stability.

Cash Flow

Operating cash flow to net income ratio is negative, indicating challenges in converting income into cash. However, the free cash flow to net income ratio is strong at 1.21, suggesting effective cash generation relative to net income. Despite a decline in free cash flow growth, the company maintains a solid cash flow position.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.37B	1.37B	1.17B	1.44B	1.40B	1.06B
Gross Profit	394.35M	394.27M	342.91M	415.17M	391.05M	237.97M
EBITDA	102.15M	112.42M	62.93M	68.54M	113.49M	19.81M
Net Income	25.39M	21.58M	-52.47M	-187.53M	66.56M	21.31M
Balance Sheet
Total Assets	1.62B	1.62B	1.47B	1.51B	1.57B	1.34B
Cash, Cash Equivalents and Short-Term Investments	453.75M	453.75M	389.48M	390.81M	313.33M	222.99M
Total Debt	524.57M	524.57M	725.88M	856.85M	651.14M	398.26M
Total Liabilities	1.01B	1.01B	1.08B	1.28B	1.19B	1.03B
Stockholders Equity	595.96M	595.96M	391.38M	222.47M	371.61M	310.25M
Cash Flow
Free Cash Flow	103.13M	100.07M	57.76M	64.97M	84.57M	136.68M
Operating Cash Flow	112.45M	109.08M	77.19M	104.39M	104.93M	153.35M
Investing Cash Flow	25.90M	24.97M	107.58M	-298.57M	-38.97M	-84.18M
Financing Cash Flow	-66.44M	-63.46M	-210.10M	236.42M	73.88M	2.85M

Penguin Solutions Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.27
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PENG, the sentiment is Negative. The current price of 22.27 is below the 20-day moving average (MA) of 22.82, below the 50-day MA of 24.62, and above the 200-day MA of 21.15, indicating a neutral trend. The MACD of -0.76 indicates Negative momentum. The RSI at 41.66 is Neutral, neither overbought nor oversold. The STOCH value of 62.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PENG.

Penguin Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALNT	―	$926.66M	63.74	5.15%	0.22%	-8.69%	-27.10%
BELFB	―	$1.80B	36.17	16.40%	0.18%	23.70%	16.97%
BHE	―	$1.57B	41.79	3.49%	1.55%	-5.95%	-43.46%
DAKT	―	$911.88M	4,270.45	4.36%	―	-7.67%	7.66%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PENG	―	$1.18B	77,758.38	6.17%	―	16.91%	―
ROG	―	$1.57B	-24.13	-5.34%	―	-4.87%	-235.48%

Penguin Solutions Corporate Events

Penguin Solutions Faces Uncertainty and Risks Post-U.S. Domestication

Penguin Solutions, Inc. faces significant uncertainty regarding the anticipated benefits of its U.S. Domestication, completed on June 30, 2025. The realization of these benefits is contingent upon factors beyond the company’s control, such as third-party responses, future contractual terms, and investor reactions. There is a risk that the benefits may not outweigh the costs and expenses incurred, potentially leading to a material adverse effect on the company’s business, operational results, or financial condition. This uncertainty poses a notable risk factor for Penguin Solutions, Inc. as it navigates its post-domestication landscape.

Penguin Solutions’ Earnings Call Highlights Growth and Challenges

Penguin Solutions’ recent earnings call for fiscal year 2025 painted a picture of robust growth and strategic advancements, yet highlighted challenges that could impact future performance. The company celebrated significant achievements, including strong financial results and strategic partnerships, but also acknowledged hurdles such as the wind-down of the Penguin Edge business and a lack of hardware sales to hyperscale customers.

Penguin Solutions Reports Strong Fiscal 2025 Results

Penguin Solutions, Inc. is a company specializing in advanced computing, integrated memory, and optimized LED solutions, positioning itself as a leader in enterprise AI infrastructure solutions.

Penguin Solutions Approves $75 Million Stock Buyback

On October 6, 2025, Penguin Solutions‘ Audit Committee approved a $75 million stock repurchase authorization, allowing the company to buy back shares of its common stock as part of its strategic financial management. The company reported strong financial results for fiscal 2025, with net sales increasing by 17% to $1.37 billion and significant improvements in both GAAP and non-GAAP earnings per share, reflecting its successful transformation and growth in the enterprise AI sector.

The most recent analyst rating on (PENG) stock is a Buy with a $31.00 price target. To see the full list of analyst forecasts on Penguin Solutions stock, see the PENG Stock Forecast page.

Penguin Solutions Announces Leadership Changes for Growth

On July 28, 2025, Penguin Solutions announced the departure of Pete Manca and the appointment of Tony Frey and Ted Gillick to senior leadership roles as part of a strategic realignment. This move is intended to accelerate growth and support innovation, positioning the company as a leader in AI infrastructure solutions.

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.