# Penguin Solutions (PENG.US)

Canonical: https://gigainvestors.com/s/PENG

Analysis as of: 2026-10-16T07:31:07.103Z. Financial observations: FY2015–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $61.86 per share; close as of 2026-10-15.

Estimated value: low $30.51 per share, central $33.07 per share, high $36.48 per share. Buy at or below the central value $33.07 per share. Valuation as of 2026-10-16T07:31:07.103Z; scenarios are not confidence intervals.

Expected annual return: 5.9% at the stated quote. About 5.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 4 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 4

- Operating margin variation: 0.80×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.07×

- FY2018: 0.13×

- FY2019: 0.07×

- FY2020: 0.04×

- FY2021: -0.01×

- FY2022: 0.05×

- FY2023: 0.01×

- FY2024: 0.02×

- FY2025: 0.05×

- FY2026: 0.10×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 8.2%

- ROIC, second-lowest year: 1.3%

- Typical minus recent gross margin: -2.5 pp

- Typical gross margin (annual median): 25.1%

- Recent gross margin (lower of latest and 3-year median): 27.7%

- Years with nonpositive capital: 0

- Capital spending / revenue: 1.8%

- ROIC including acquisitions, ten-year median: 7.7%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 18.3%

- FY2018: 45.8%

- FY2019: 23.0%

- FY2020: 9.6%

- FY2021: -3.0%

- FY2022: 6.7%

- FY2023: 1.3%

- FY2024: 2.6%

- FY2025: 6.6%

- FY2026: 21.3%

### economics: pass

- Owner earnings / net income, 5-yr: 6.29×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $181M

- Net income, five-year total: $29M

- Return on incremental invested capital: 37.3%

- Working capital / revenue, annual change: 1.5 pp

- Working capital / revenue, change between three-year averages: 9.3 pp

- Working capital / revenue, final three-year average: 26.1%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.40×

- FY2023: 0.83×

- FY2024: 0.12×

- FY2025: 3.19×

- FY2026: 1.00×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 23.0% vs 6.6%

- Per-share earnings: -0.49 to 0.40 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- acquired goodwill and intangibles (proxy) exceeds half of ten-year net income with low and deteriorating ROIC

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 16.6%

- Ordinary dilution, 5-year annual growth: 5.7%

- Market cap gain: $3.0B

- Cumulative retained earnings: $222M

- Diluted shares, 10-year annual growth: 16.6%

- Diluted shares, 5-year annual growth: 5.7%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: $0.89

- Per-share value, starting three-year median: -$0.49

- Per-share value, ending three-year median: $0.40

- Buybacks concentrated in cheaper years (correlation): -0.07

- Average buyback yield: 2.5%

- Buyback history: 9 years

- Debt-funded buybacks: Yes

- Acquisition spending: $367M

- Cumulative net income, 10 years: $212M

- ROIC, first three-year median: 23.0%

- ROIC, last three-year median: 6.6%

Chart: Earnings per share; fiscal year observations.

- FY2017: -$0.49

- FY2018: $2.58

- FY2019: $1.09

- FY2020: -$0.02

- FY2021: $0.44

- FY2022: $1.22

- FY2023: -$3.65

- FY2024: -$1.00

- FY2025: $0.40

- FY2026: $2.82

### accounting: fail

- Sloan accruals exceed 10%

- latest-year receivables to sales index (DSRI) exceeds 1.465

- earnings not backed by cash

- Sloan accruals: 12.0%

- Receivables to sales index (DSRI): 2.04×

- Restructuring years, last five: 2

- Earnings backed by cash: No

- Operating cash / earnings: -0.84×

- Accounting red flags: 2

- Goodwill and intangibles / equity: 0.28×

- Stock compensation / operating cash flow: 37.7%

Chart: Sloan accruals; fiscal year observations.

- FY2017: -1.4%

- FY2018: 7.7%

- FY2019: -16.8%

- FY2020: -11.2%

- FY2021: -9.8%

- FY2022: -2.4%

- FY2023: -19.4%

- FY2024: -8.8%

- FY2025: -5.4%

- FY2026: 12.0%

## Holders

- [Dan Davidowitz](https://gigainvestors.com/pcm): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 11.7% a year for ten years · "Penguin Edge Wind-Down Pressures Revenue: Can AI Drive PENG's Growth?" (finance.yahoo.com, Sep 2026) · sales +26.5%

Story as of 2026-10-16T09:59:22.973Z; price observation 2026-10-15.

Price needs cash profits to grow 11.7% a year for ten years

- 2026-04-02: Penguin Solutions jumps 10% on upbeat guidance and AI-led growth ([seekingalpha.com](https://seekingalpha.com/news/4571940-penguin-solutions-jumps-10-on-upbeat-guidance-and-ai-led-growth?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-09-15: Penguin Edge Wind-Down Pressures Revenue: Can AI Drive PENG's Growth? ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/penguin-edge-wind-down-pressures-150600710.html))

### Sales · FY2025–2026

sales +26.5%; source https://www.sec.gov/Archives/edgar/data/1616533/000161653325000061/peng-20250829.htm; observed 2025-10-21.

- FY2017: $761M 

- FY2018: $1.3B 

- FY2019: $1.2B 

- FY2020: $1.1B 

- FY2021: $1.1B 

- FY2022: $1.4B 

- FY2023: $1.4B 

- FY2024: $1.2B 

- FY2025: $1.4B 

- FY2026: $1.7B 

### Gross margin · FY2026

gross margin 27.7%; source https://www.sec.gov/Archives/edgar/data/1616533/000161653325000061/peng-20250829.htm; observed 2025-10-21.

- FY2017: 21.3% 

- FY2018: 22.6% 

- FY2019: 19.6% 

- FY2020: 19.3% 

- FY2021: 22.5% 

- FY2022: 28.0% 

- FY2023: 28.8% 

- FY2024: 29.3% 

- FY2025: 28.8% 

- FY2026: 27.7% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in information technology services; annual sales are USD 1.7 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2026: revenue 1731468000; grossProfit 478925000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PENG.US: Penguin Solutions, Inc. designs, builds, deploys and manages enterprise solutions worldwide. The company operates through three segments: Advanced Computing, Integrated Memory, and Optimized LED. It offers hardware, software, and services focusing on technical computing for core and cloud environments through computing and AI solutions. The company also provides Penguin Solutions OriginAI, an AI infrastructure solution for customers deploying GPUs at scale; continuous availability of customers critical data and applications in data centers and edge locations under the Stratus brand products; and dynamic random-access memory, modules, solid-state/flash storage, and integrated memory solutions to networking and telecom, data analytics, AI, and ML under the SMART Modular Technologies brand. In addition, it provides Zefr, a memory module; Altus and AMD EPYC based servers for expansive memory for AI workloads; flash memory products comprising solid-state drives, Serial Advanced Technology Attachment, and PCIe NVMe products in 2.5 enclosures, M.2, EDSFF, and other form factors; and multimediacard and embedded and removable USB products, SD and microSD Card configurations, and firmware development. Further, the company offers procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging supply chain services; and LEDs under the Cree LED brand; Cree LED XLamp and J Series packaged LED components. It serves OEMs, enterprises, government, and other customers through direct and third-party channels. The company has a strategic collaboration with Deepgram, Dell Technologies, and ZulaFly to offer healthcare, location-based workflow, and safety solutions. 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 headquartered in Fremont, California.

### Why customers stay

Margins ranged from 27.7% to 29.3% during 2024–26; it earns 8.2% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2024: grossProfit / revenue = 29.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2025: grossProfit / revenue = 28.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2026: grossProfit / revenue = 27.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); 10-year return on capital observations [[2017,0.18312128390568377],[2018,0.45842411703163505],[2019,0.22992501288279343],[2020,0.09627334757242585],[2021,-0.030169549222281388],[2022,0.06673421946712761],[2023,0.013120456254700427],[2024,0.0255433668419862],[2025,0.0661264072635434],[2026,0.2130687922593429]]; median 0.08150378351977673. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Spends 6.4% of cash earnings on expansion; earns 37.3% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2017: growth capex 0; upkeep 18678000; owner earnings 6765000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2018: growth capex 0; upkeep 25738000; cash acquisitions 42316000; owner earnings 119907000. Growth capex plus acquisitions / owner earnings = 0.3529068361313351.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2019: growth capex 0; upkeep 33433000; cash acquisitions 76088000; owner earnings 47105000. Growth capex plus acquisitions / owner earnings = 1.6152850015921876.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2020: growth capex 0; upkeep 32445000; cash acquisitions 0; owner earnings 2842000. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2021: growth capex 0; upkeep 16669000; cash acquisitions 35677000; owner earnings 39578000. Growth capex plus acquisitions / owner earnings = 0.9014351407347516.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2022: growth capex 0; upkeep 20359000; cash acquisitions 0; owner earnings 92863000. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2025: growth capex 0; upkeep 9012000; owner earnings 68780000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2026: growth capex 11518824; upkeep 50176; owner earnings 180615000. Growth capex / owner earnings = 0.0637755668133876.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); Incremental return on capital 0.3725656425527473, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); Dividend observations: [[2017,0],[2018,0],[2019,0],[2020,0],[2021,0],[2022,0],[2023,0],[2024,0],[2025,7860000],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); FY2026: cash repurchases 86660000 USD.

### Are managers owners

Insiders own 3.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PENG.US SharesStats.PercentInsiders = 3.473 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 11.7% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2025-10-21); Ten-year compound average after fade. Initial solved rate 0.15614947844845284. Price 61.86; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share -0.16790694313994653 → FY2026 2.820346658338538. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2017-05: $6.55 per share

- 2017-06: $8.10 per share

- 2017-07: $9.05 per share

- 2017-08: $9.94 per share

- 2017-09: $13.39 per share

- 2017-10: $15.69 per share

- 2017-11: $15.00 per share

- 2017-12: $16.85 per share

- 2018-01: $18.14 per share

- 2018-02: $17.36 per share

- 2018-03: $24.92 per share

- 2018-04: $19.58 per share

- 2018-05: $22.27 per share

- 2018-06: $15.94 per share

- 2018-07: $15.27 per share

- 2018-08: $16.50 per share

- 2018-09: $14.37 per share

- 2018-10: $14.01 per share

- 2018-11: $17.15 per share

- 2018-12: $14.85 per share

- 2019-01: $12.41 per share

- 2019-02: $14.66 per share

- 2019-03: $9.60 per share

- 2019-04: $10.87 per share

- 2019-05: $8.52 per share

- 2019-06: $11.50 per share

- 2019-07: $15.22 per share

- 2019-08: $14.21 per share

- 2019-09: $12.74 per share

- 2019-10: $14.85 per share

- 2019-11: $15.40 per share

- 2019-12: $18.97 per share

- 2020-01: $15.08 per share

- 2020-02: $13.42 per share

- 2020-03: $12.15 per share

- 2020-04: $12.65 per share

- 2020-05: $13.39 per share

- 2020-06: $13.59 per share

- 2020-07: $13.95 per share

- 2020-08: $12.60 per share

- 2020-09: $13.67 per share

- 2020-10: $13.20 per share

- 2020-11: $15.35 per share

- 2020-12: $18.82 per share

- 2021-01: $18.58 per share

- 2021-02: $23.35 per share

- 2021-03: $23.01 per share

- 2021-04: $23.08 per share

- 2021-05: $23.70 per share

- 2021-06: $23.84 per share

- 2021-07: $23.42 per share

- 2021-08: $24.23 per share

- 2021-09: $22.25 per share

- 2021-10: $26.73 per share

- 2021-11: $28.51 per share

- 2021-12: $35.50 per share

- 2022-01: $28.68 per share

- 2022-02: $27.45 per share

- 2022-03: $25.83 per share

- 2022-04: $22.66 per share

- 2022-05: $24.65 per share

- 2022-06: $16.37 per share

- 2022-07: $19.62 per share

- 2022-08: $18.35 per share

- 2022-09: $15.87 per share

- 2022-10: $13.53 per share

- 2022-11: $16.91 per share

- 2022-12: $14.88 per share

- 2023-01: $17.19 per share

- 2023-02: $16.70 per share

- 2023-03: $17.24 per share

- 2023-04: $15.42 per share

- 2023-05: $22.58 per share

- 2023-06: $29.01 per share

- 2023-07: $26.60 per share

- 2023-08: $25.83 per share

- 2023-09: $24.35 per share

- 2023-10: $13.70 per share

- 2023-11: $16.66 per share

- 2023-12: $18.93 per share

- 2024-01: $19.65 per share

- 2024-02: $21.27 per share

- 2024-03: $26.32 per share

- 2024-04: $18.27 per share

- 2024-05: $20.58 per share

- 2024-06: $22.87 per share

- 2024-07: $23.40 per share

- 2024-08: $20.72 per share

- 2024-09: $20.95 per share

- 2024-10: $15.05 per share

- 2024-11: $18.14 per share

- 2024-12: $19.19 per share

- 2025-01: $20.28 per share

- 2025-02: $19.93 per share

- 2025-03: $17.37 per share

- 2025-04: $17.07 per share

- 2025-05: $17.76 per share

- 2025-06: $19.81 per share

- 2025-07: $23.57 per share

- 2025-08: $24.13 per share

- 2025-09: $26.28 per share

- 2025-10: $22.27 per share

- 2025-11: $20.23 per share

- 2025-12: $19.56 per share

- 2026-01: $19.21 per share

- 2026-02: $20.78 per share

- 2026-03: $17.60 per share

- 2026-04: $30.41 per share

- 2026-05: $55.83 per share

- 2026-06: $76.01 per share

- 2026-07: $52.63 per share

- 2026-08: $49.08 per share

- 2026-09: $54.69 per share

- 2026-10: $61.86 per share

## Annual estimated value (USD per share)

- FY2019: low $4.08 per share, central $4.43 per share, high $4.89 per share

- FY2020: low $4.95 per share, central $5.26 per share, high $5.68 per share

- FY2021: low $13.07 per share, central $14.29 per share, high $15.93 per share

- FY2022: low $16.13 per share, central $17.64 per share, high $19.64 per share

- FY2023: low $18.56 per share, central $20.15 per share, high $22.26 per share

- FY2024: low $7.60 per share, central $7.69 per share, high $7.80 per share

- FY2025: low $18.16 per share, central $19.58 per share, high $21.48 per share

- FY2026: low $24.42 per share, central $26.46 per share, high $29.19 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:36:51.698Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1616533/000161653325000061/peng-20250829.htm); period 2025-08-29, filed 2025-10-21.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.