Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $917.97M
• Dividend Yield: N/A
• Average Volume (3M): 911.38K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.17
• Revenue Growth: 4.71%
• EPS Growth: 95.60%
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 66
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.52
• Shares Outstanding: 52,756,645
• 10 Day Avg. Volume: 604,634
• 30 Day Avg. Volume: 911,384
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 3.39
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $24.67
• Price Target Upside: 38.21% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Penguin Solutions scores a 65, reflecting strong revenue growth and strategic advancements, particularly in the Advanced Computing segment. However, ongoing profitability issues and technical indicators showing downward trends moderate the overall score. The raised revenue outlook and strategic partnerships are positive, but challenges in the LED segment and anticipated revenue declines in the second half pose risks.

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 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, 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 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 displays solid revenue growth and strong cash flow management. However, profitability concerns remain due to net losses and low margins, despite a stable balance sheet with moderate leverage.

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
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.17B	1.44B	1.40B	1.06B	1.12B
	Gross Profit
342.91M	415.17M	391.05M	237.97M	216.40M
	EBIT
18.30M	8.74M	67.18M	-15.71M	41.33M
	EBITDA
62.93M	68.54M	113.49M	19.81M	60.79M
	Net Income Common Stockholders
-52.47M	-187.53M	66.56M	21.31M	-1.14M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
389.48M	390.81M	313.33M	222.99M	150.81M
	Total Assets
1.47B	1.51B	1.57B	1.34B	786.61M
	Total Debt
717.89M	856.85M	651.14M	398.26M	221.71M
	Net Debt
334.74M	491.28M	337.81M	175.27M	70.89M
	Total Liabilities
1.08B	1.28B	1.19B	1.03B	504.50M
	Stockholders Equity
391.38M	222.47M	371.61M	310.25M	282.10M
Cash Flow		Free Cash Flow
57.76M	64.97M	84.57M	136.68M	54.76M
	Operating Cash Flow
77.19M	104.39M	104.93M	153.35M	87.20M
	Investing Cash Flow
107.58M	-298.57M	-38.97M	-84.18M	-32.04M
	Financing Cash Flow
-210.10M	236.42M	73.88M	2.85M	12.59M

Penguin Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 17.85
• 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 17.85 is above the 20-day moving average (MA) of 16.91, above the 50-day MA of 17.45, and below the 200-day MA of 18.94, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 53.80 is Neutral, neither overbought nor oversold. The STOCH value of 80.70 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
CTS	69 Neutral	$1.16B	19.72	11.39%	0.41%	-2.76%	16.64%
BELFA	68 Neutral	$869.91M	18.23	11.87%	0.38%	-6.15%	-42.24%
FARO	66 Neutral	$814.42M	―	-0.34%	―	-4.76%	97.93%
LYTS	66 Neutral	$463.18M	21.72	10.42%	1.29%	17.89%	-23.37%
PENG	65 Neutral	$917.97M	―	-1.21%	―	4.71%	95.60%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%
MLAB	51 Neutral	$653.61M	―	-89.38%	0.53%	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.