Penguin Solutions (PENG) AI Stock Analysis

• Market Cap: $1.44B
• Dividend Yield: N/A
• Average Volume (3M): 894.82K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.06
• Revenue Growth: 14.09%
• EPS Growth: 91.13%
• Country: US
• Employees: 2,700
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.47
• Shares Outstanding: 52,401,115
• 10 Day Avg. Volume: 1,373,742
• 30 Day Avg. Volume: 894,818
• PEG Ratio: 0.26
• Price to Book (P/B): 2.59
• Price to Sales (P/S): 0.86
• P/FCF Ratio: 17.52
• Enterprise Value/Market Cap: 0.65
• Enterprise Value/Revenue: 0.70
• Enterprise Value/Gross Profit: 2.45
• Enterprise Value/Ebitda: 10.13
• 1Y Price Target: $27.43
• Price Target Upside: -0.36% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

• Rating: 70 Neutral
• Price Target: $27.00 ▼(-1.93% Downside)

Penguin Solutions' overall score is driven by strong revenue growth and strategic initiatives, including leadership changes and financial restructuring. However, challenges in profitability and valuation concerns due to negative earnings impact the score negatively.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, enhancing long-term business stability.

Strategic Partnerships

Strategic partnerships in AI infrastructure bolster competitive advantage and open new revenue streams, supporting sustainable growth.

Financial Flexibility

Enhanced financial flexibility through refinancing and credit facilities supports long-term investment and operational resilience.

Negative Factors

Profitability Challenges

Negative profit margins indicate difficulty in converting sales into profit, which can hinder long-term financial health and investor confidence.

Advanced Computing Revenue Decline

Declining revenue in key segments like Advanced Computing may signal competitive pressures or market saturation, affecting future growth.

Gross Margin Pressure

Pressure on gross margins can reduce profitability and limit the ability to reinvest in growth, impacting long-term business sustainability.

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 shows strong revenue growth and effective cash flow management, but faces challenges in profitability and operational efficiency. The balance sheet is stable with moderate leverage, but negative net income impacts return metrics.

Income Statement

Penguin Solutions shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 28.66%, indicating a decent efficiency in managing production costs. However, the net profit margin is negative at -0.64%, reflecting ongoing challenges in achieving profitability. Revenue growth from the previous year is strong at 14.63%, suggesting positive sales momentum. EBIT and EBITDA margins are relatively low at 4.50% and 5.77% respectively, pointing to limited operational efficiency.

Balance Sheet

The balance sheet of Penguin Solutions presents a stable financial position with a debt-to-equity ratio of 1.20, indicating moderate leverage. The return on equity (ROE) is negative due to net losses, which is a concern for investors. However, the equity ratio stands at 32.43%, showing a reasonable proportion of equity financing. The company has a strong cash position with significant cash and short-term investments, enhancing liquidity.

Cash Flow

Cash flow analysis reveals a robust operating cash flow to net income ratio of -19.97, reflecting strong cash generation despite net losses. Free cash flow has grown significantly, with a growth rate of 186.85%, indicating improved cash management. The free cash flow to net income ratio is -19.29, further highlighting efficient cash flow management despite profitability challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.34B	1.17B	1.44B	1.40B	1.06B	1.12B
Gross Profit	384.71M	342.91M	415.17M	391.05M	237.97M	216.40M
EBITDA	92.90M	62.93M	68.54M	113.49M	19.81M	60.79M
Net Income	-8.59M	-52.47M	-187.53M	66.56M	21.31M	-1.14M
Balance Sheet
Total Assets	1.80B	1.47B	1.51B	1.57B	1.34B	786.61M
Cash, Cash Equivalents and Short-Term Investments	735.55M	389.48M	390.81M	313.33M	222.99M	150.81M
Total Debt	703.21M	717.89M	856.85M	651.14M	398.26M	221.71M
Total Liabilities	1.21B	1.08B	1.28B	1.19B	1.03B	504.50M
Stockholders Equity	584.77M	391.38M	222.47M	371.61M	310.25M	282.10M
Cash Flow
Free Cash Flow	165.66M	57.76M	64.97M	84.57M	136.68M	54.76M
Operating Cash Flow	171.46M	77.19M	104.39M	104.93M	153.35M	87.20M
Investing Cash Flow	-6.27M	107.58M	-298.57M	-38.97M	-84.18M	-32.04M
Financing Cash Flow	99.86M	-210.10M	236.42M	73.88M	2.85M	12.59M

Penguin Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 27.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 27.53 is above the 20-day moving average (MA) of 25.22, above the 50-day MA of 24.55, and above the 200-day MA of 20.45, indicating a bullish trend. The MACD of 0.86 indicates Negative momentum. The RSI at 72.68 is Negative, neither overbought nor oversold. The STOCH value of 88.20 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	77 Outperform	1.75B	34.89	12.60%	0.20%	6.08%	-23.58%
ALNT	74 Outperform	789.56M	54.31	4.97%	0.26%	-8.69%	-27.10%
PENG	70 Neutral	$1.44B	―	-1.80%	―	14.09%	91.13%
BHE	69 Neutral	1.44B	38.27	1.89%	1.69%	-5.95%	-43.46%
DAKT	68 Neutral	1.07B	5,031.82	-3.72%	―	-7.67%	7.66%
ROG	62 Neutral	1.48B	-23.18	-5.37%	―	-7.61%	-212.91%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Penguin Solutions Corporate Events

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.

Penguin Solutions Secures $400M Credit Facility

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.

Penguin Solutions Approves Redomiciling to United States

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.