Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.04B
• Dividend Yield: N/A
• Average Volume (3M): 1.06M
• Price to Earnings (P/E): 68680.2
• Beta (1Y): 2.48
• 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: 905,182
• 30 Day Avg. Volume: 1,062,581
• 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: 1.54
• Enterprise Value/Revenue: 1.17
• Enterprise Value/Gross Profit: 4.06
• Enterprise Value/Ebitda: 15.99
• 1Y Price Target: $26.50
• Price Target Upside: 34.72% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: $23.50 ▲(19.47% Upside)

Penguin Solutions' overall stock score is driven by moderate financial performance and strategic growth initiatives. However, high valuation concerns and mixed technical indicators temper the outlook. The stock buyback and strong earnings call results provide positive signals, but future challenges in business segments and market conditions remain.

Positive Factors

Revenue Growth

The 17% revenue growth reflects strong market demand and effective business strategies, indicating robust future potential in expanding sectors like AI and HPC.

Strategic Partnerships

Strategic partnerships with major tech firms enhance product offerings and market reach, fostering innovation and competitive advantage in the tech industry.

Stock Buyback

The stock buyback reflects management's confidence in financial health and commitment to enhancing shareholder value, supporting long-term investor trust.

Negative Factors

Penguin Edge Business Wind Down

The wind-down of Penguin Edge could lead to revenue loss and operational restructuring, impacting short- to medium-term financial performance.

No Hardware Sales to Hyperscale Customers

The lack of sales to hyperscale customers limits growth opportunities in a key market segment, potentially affecting future revenue streams.

LED Segment Challenges

Flat revenue in the LED segment indicates challenges in overcoming macroeconomic and secular headwinds, which could hinder growth in this area.

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

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	100.22M	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: 19.67
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 19.67 is below the 20-day moving average (MA) of 20.25, below the 50-day MA of 21.06, and below the 200-day MA of 21.13, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 41.41 is Neutral, neither overbought nor oversold. The STOCH value of 3.70 is Positive, 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
BELFB	73 Outperform	$2.13B	33.79	16.40%	0.17%	23.70%	14.78%
ALNT	72 Outperform	$925.79M	48.90	6.58%	0.23%	-2.88%	26.14%
BHE	70 Neutral	$1.63B	44.57	3.37%	1.44%	-2.93%	-40.33%
DAKT	67 Neutral	$935.96M	140.27	2.64%	―	-6.13%	-76.92%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PENG	61 Neutral	$1.04B	68,680.17	6.17%	―	16.91%	―
ROG	58 Neutral	$1.66B	-25.32	-5.34%	―	-4.87%	-235.48%

Penguin Solutions Corporate Events

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.