Penguin Solutions Inc. Common Stock (PENG)

FairStock Score: 44/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I approach Penguin Solutions as a turnaround, not a stalwart. The business sells technical computing, AI infrastructure, memory, and LED solutions—cyclical, capital-intensive, and competitive. The filed record shows real improvement: FY2025 revenue was $1.4B and net income $25.4M, or EPS $0.28, after FY2024's $52.5M loss and FY2023's $187.5M loss. In the fiscal Q3 2026 quarter ended 2026-05-29, revenue was $478.7M, net income $44.7M, and diluted EPS $0.68. That is progress. FairStock's ROE is 16.19%, and the PEG of 0.06 hints growth may be underappreciated if it persists. But I do not see a durable moat yet; hardware and integration work rarely produces one without scale or switching costs. Financial health is mixed: debt/equity is 0.77, ROCE is only 3.84%, Piotroski is 4/9, Altman Z is 2.28, and trailing free cash flow is -$69.4M with a -1.7% FCF yield. Profits without cash are not yet owner earnings. Valuation is the rub. At the 2026-10-13 close of $78.20, FairStock computes P/E 56.26, P/B 9.12, EV/EBITDA 23.05, and a Graham Number of $19.79—a -295.15% margin of safety. The stock trades far above asset and earnings anchors. Beta is 2.85, so volatility is high. I would want several quarters of positive free cash flow, better returns on capital, and a wider discount before calling this a compelling Graham-style bargain.

In plain English: Penguin Solutions makes computing hardware, software, and services, including AI and memory products. The company has moved from losses to profits, and recent filed sales and income have improved, but it is not generating positive free cash flow and carries debt. At $78.20, the stock looks expensive compared with the earnings and book value shown.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q3 2026 10-Q (period ended 2026-05-29) · fiscal Q2 2026 10-Q (period ended 2026-02-27) · fiscal Q1 2026 10-Q (period ended 2025-11-28) · fiscal Q4 2025 10-K (period ended 2025-08-29) · FY2025 10-K (period ended 2025-08-29) · FY2024 10-K (period ended 2024-08-30) · FY2023 10-K (period ended 2023-08-25)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer