Penguin Solutions, Inc. (PENG) stock analysis

P/E below its 5-year median

Penguin Solutions's P/E of 18.9 is below its own 5-year median of 36.9.

P/E below the industry

Penguin Solutions's P/E of 18.9 is below the Electronic Components and Accessories median of 34.8.

EV/EBITDA below its 5-year median

Penguin Solutions's EV/EBITDA of 14.5 is below its 5-year median of 15.9.

P/B above the industry

Penguin Solutions's price-to-book of 5.70 is above the Electronic Components and Accessories median of 3.49.

Trading below fair value

The share price of $49.25 is below our fair value estimate of $79.73.

Margin of safety over 20%

The price is 38.2% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 6.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growth over 3 years

Needs positive EPS three years ago and today.

Earnings growth accelerating

Net income grew 611% over the last twelve months, against a 5-year average of 53.3% a year.

Growing faster than the industry

Revenue grew 26.5% over the last twelve months; the Electronic Components and Accessories median is 17.3%.

Guidance raised

Penguin Solutions raised its fiscal year 2026 Diluted earnings per share outlook on Jul 7, 2026.

Gross margin slipping

Gross margin was 27.7% over the last twelve months, against 28.8% a year earlier.

Return on equity under 15%

Return on equity was 39.5% over the last twelve months and averaged -3.0% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 31.1%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Penguin Solutions's return on equity of 39.5% is above the Electronic Components and Accessories median of 4.8%.

Earnings grew over 5 years

Net income grew 53.3% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 10.4% over the last twelve months, against a 5-year average of -0.1%.

Net margin above the industry

Penguin Solutions's net margin of 10.4% is above the Electronic Components and Accessories median of 2.9%.

High debt

Debt is 152% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 118% five years ago to 152%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals -19.3% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.88 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.26; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Penguin Solutions has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.