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Penguin Solutions
(NASDAQ:PENG)
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Rating:65Neutral
Price Target:
$85.00
▲(68.72% Upside)
Action:Reiterated
Date:10/08/26
The score is driven by strong technical momentum and a very upbeat earnings call with raised FY2027 growth/EPS guidance. Offsetting that, financial performance is held back by the latest year’s negative operating/free cash flow and meaningful leverage, while valuation (P/E ~25.8) offers limited margin of safety without dividend support.
Positive Factors
AI Infrastructure Growth
Rapid growth in AI infrastructure and memory, supported by expanding customer adoption and a record backlog, indicates that Penguin is gaining exposure to structural computing demand. This provides a durable foundation for revenue growth over the next several quarters, beyond a single project or reporting period.
Negative Factors
Negative Cash Generation
The shift from positive operating cash flow to a substantial cash outflow weakens the quality and durability of the latest earnings recovery. Higher receivables and inventory require funding before customer cash is collected, potentially limiting financial flexibility and increasing reliance on external capital.
Read all positive and negative factors
Positive Factors
Negative Factors
AI Infrastructure Growth
Rapid growth in AI infrastructure and memory, supported by expanding customer adoption and a record backlog, indicates that Penguin is gaining exposure to structural computing demand. This provides a durable foundation for revenue growth over the next several quarters, beyond a single project or reporting period.
Read all positive factors
Penguin Solutions (PENG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.91B
Dividend YieldN/A
Average Volume (3M)2.91M
Price to Earnings (P/E)27.1
Beta (1Y)2.49
Revenue Growth26.50%
EPS Growth186.04%
CountryUS
Employees2,900
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)2.82
Shares Outstanding51,242,700
10 Day Avg. Volume5,970,105
30 Day Avg. Volume2,905,374
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)3.62
Price to Sales (P/S)1.51
P/FCF Ratio-16.04
Enterprise Value/Market Cap0.92
Enterprise Value/Revenue2.08
Enterprise Value/Gross Profit7.53
Enterprise Value/Ebitda17.70
Forecast
1Y Price Target
$85.83Price Target Upside70.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)3.39
Revenue Forecast (FY)$2.44B
Penguin Solutions Business Overview & Revenue Model
Company Description
Penguin Solutions, Inc. is a global technology company focused on designing and delivering advanced enterprise solutions. Its business operations are segmented into three primary divisions: Advanced Computing, Integrated Memory, and Optimized LED....
How the Company Makes Money
Penguin Solutions makes money primarily by selling and delivering infrastructure solutions and services to enterprise and institutional customers. Key revenue streams include: (1) Systems and solutions revenue: revenue from designing, configuring,...
Penguin Solutions Earnings Call Summary
Earnings Call Date:Oct 06, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jan 05, 2027
Earnings Call Sentiment Positive
The call was strongly positive, supported by record Q4 results, accelerating AI infrastructure and memory demand, record backlog, major neocloud wins and a materially increased fiscal 2027 outlook. The main challenges were declines in legacy and hyperscale-related businesses, full-year gross margin compression, substantial working capital usage, cash flow outlays and ongoing supply and customer deployment timing variables. Highlights significantly outweighed the lowlights.Positive Updates
Record Fourth-Quarter Results
Penguin Solutions set company records in Q4 fiscal 2026 for net sales, gross profit dollars, operating income, operating margin, net income and adjusted EBITDA. Net sales were $567 million, up 68% year-over-year and 18% sequentially, while diluted EPS was $1, up 133% year-over-year.
Negative Updates
Advanced Computing Full-Year Decline
Full-year Advanced Computing net sales were $559 million, down 14% year-over-year, reflecting the wind-down of Penguin Edge and lower hyperscale hardware sales.
Read all updates
Q4-2026 Updates
Positive
Negative
Record Fourth-Quarter Results
Penguin Solutions set company records in Q4 fiscal 2026 for net sales, gross profit dollars, operating income, operating margin, net income and adjusted EBITDA. Net sales were $567 million, up 68% year-over-year and 18% sequentially, while diluted EPS was $1, up 133% year-over-year.
Read all positive updates
Company Guidance
For fiscal year 2027, Penguin Solutions expects net sales to grow approximately 40% at the midpoint, plus or minus 10 percentage points, or an increase of approximately $700 million to approximately $2.43 billion at the midpoint; using the same fiscal 2026 outlook midpoint, the current fiscal 2027 midpoint represents growth of approximately 45%, versus the preliminary view of approximately 30% growth. Advanced Computing net sales are expected to grow approximately 40% at the midpoint, plus or minus 10 percentage points; Integrated Memory net sales are expected to grow approximately 50% at the midpoint, plus or minus 10 percentage points; and Optimized LED net sales are expected to be relatively flat year-over-year. Full year gross margin is expected to be approximately 28%, plus or minus 2 percentage points, operating expenses approximately $275 million, plus or minus $10 million, and diluted earnings per share approximately $4.45, plus or minus $0.70, representing growth of approximately 55% at the midpoint; the EPS outlook assumes a diluted share count of approximately 63 million shares and an effective tax rate of approximately 20%.Penguin Solutions Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
41
Neutral
| Breakdown | Aug 2026 | Aug 2025 | Aug 2024 | Aug 2023 | Aug 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.73B | 1.37B | 1.17B | 1.44B | 1.40B |
| Gross Profit | 478.93M | 394.27M | 342.91M | 415.17M | 391.05M |
| EBITDA | 152.41M | 112.42M | 62.93M | 68.54M | 113.49M |
| Net Income | 180.62M | 21.58M | -52.47M | -187.53M | 66.56M |
Balance Sheet | |||||
| Total Assets | 2.78B | 1.62B | 1.47B | 1.51B | 1.57B |
| Cash, Cash Equivalents and Short-Term Investments | 647.21M | 453.75M | 389.48M | 390.81M | 313.33M |
| Total Debt | 846.85M | 733.03M | 725.88M | 856.85M | 651.14M |
| Total Liabilities | 2.04B | 1.01B | 1.08B | 1.28B | 1.19B |
| Stockholders Equity | 723.45M | 595.96M | 391.38M | 222.47M | 371.61M |
Cash Flow | |||||
| Free Cash Flow | -163.48M | 100.07M | 57.76M | 64.97M | 84.57M |
| Operating Cash Flow | -151.91M | 109.08M | 77.19M | 104.39M | 104.93M |
| Investing Cash Flow | 58.09M | 24.97M | 107.58M | -298.57M | -38.97M |
| Financing Cash Flow | 287.28M | -63.46M | -210.10M | 236.42M | 73.88M |
Penguin Solutions Technical Analysis
Positive
50.38
Price Trends
55.72
Positive
59.09
Positive
41.26
Positive
Market Momentum
5.62
Negative
77.89
Negative
88.92
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 50.38 is below the 20-day moving average (MA) of 59.13, below the 50-day MA of 55.72, and above the 200-day MA of 41.26, indicating a bullish trend. The MACD of 5.62 indicates Negative momentum. The RSI at 77.89 is Negative, neither overbought nor oversold. The STOCH value of 88.92 is Negative, 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 68 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $918.11B | 7.34 | 100.17% | 0.01% | 134.05% | 421.22% | |
82 Outperform | $1.16T | 13.66 | 91.77% | 0.05% | 256.33% | 884.73% | |
79 Outperform | $992.71B | 154.34 | 10.07% | ― | 39.54% | 125.82% | |
68 Neutral | $30.18B | 49.07 | 8.38% | ― | -3.14% | 44.55% | |
65 Neutral | $3.91B | 27.07 | 30.67% | ― | 26.50% | 186.04% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
54 Neutral | $36.75B | -50.33 | -11.59% | ― | 90.83% | -275.74% |
* Technology Sector Average
PENG
Penguin Solutions
79.16
56.84
254.64%
AMD
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174.58%
MU
Micron
989.04
796.46
413.57%
ON
ON Semiconductor
76.00
25.89
51.67%
CBRS
Cerebras Systems, Inc. Class A
146.62
-164.45
-52.87%
SKHY
SK Hynix
162.23
-5.78
-3.44%
Penguin Solutions Corporate Events
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Penguin Solutions Names New CFO Amid Record Results
Positive
Oct 6, 2026
On October 6, 2026, Penguin Solutions appointed veteran finance executive Stephen Cumming as Senior Vice President and Chief Financial Officer, with immediate effect, replacing interim CFO Aaron Johnson, who returned to his prior role as Vice Pres...
Business Operations and StrategyPrivate Placements and Financing
Penguin Solutions Issues Zero-Coupon Convertible Notes and Refinances
Positive
Jul 18, 2026
On July 17, 2026, Penguin Solutions issued $750 million of 0.00% Convertible Senior Notes due 2031 in a private offering, generating about $735.1 million in net proceeds after discounts and expenses. The zero-coupon notes, convertible into cash an...
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.