Penguin Solutions

PENG

Hardware, Equipment & Parts · Technology

Price

$52.62

+1.48 (+2.89%)

Market Cap

$2.70B

Exchange

NASDAQ

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Data as of Aug 23, 2026 · filings through May 29, 2026

How the score breaks down

Quality

Mixed

Growth

Good

Cash Flow

Weak

Stability

Strong

Valuation

Good

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Share count rising — dilution

+5.4% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 51.6M (2021) → 54.4M (2025)

Winston Score History

The full picture

Penguin Solutions designs and sells technology systems that help businesses run powerful computing workloads, especially artificial intelligence and high-performance computing tasks. Its main products include custom servers, memory modules, and storage systems sold to large enterprises, government agencies, and research institutions. The company also offers managed services to help customers deploy and operate these complex systems.

Penguin Solutions earns money through hardware sales, professional services, and recurring managed service contracts, which provide more predictable revenue. It operates primarily in North America and competes against larger players like Dell and HPE, but carves out a niche by offering highly customized solutions rather than off-the-shelf products. The biggest growth driver is rising demand for AI infrastructure, as companies race to build out computing capacity — but the company faces real risk from supply chain disruptions, component shortages, and intense price competition from much larger rivals with deeper resources.

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+47.6% YoY

YoY Growth Rate

Revenue accelerating

EPS Growth

>+1,000% YoY

YoY Growth Rate

EPS growth accelerating

R&D Spend

$80M/ year

→ Flat (-2% vs prior year)

5.8% of revenue

Below sector average (15%)

Steady R&D investment year-over-year

Insider Activity

4.4%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Runway

~17 months

$440M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Adequate runway but may need to raise capital within 2 years

Revenue accelerating

Penguin Solutions grew revenue 48% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Profit per sale

Gross Margin

27.8%

Modest — 27.8% gross margin

Profit after running costs

Operating Margin

10.6%

Modest — 10.6% operating margin

Return on the money invested

ROCE

12.8%

Good — 12.8% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales growth

Sales YoY

+12.0%

Steady sales growth (+12.0% YoY)

Profit growth

EPS YoY

N/A

Data not available

How steady the profit is

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Profit that turns into cash

Cash Conversion

-58%

Weak — only -58% of profit becomes cash

Spare cash per sale

FCF Margin

-4.4%

Burning cash (-4.4%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

What it owes vs what it owns

Debt / Equity

1.01

Elevated debt (1.01)

Covers its interest

Interest Cover

71.83x

Comfortably covers interest (71.8x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

Price vs profit

P/E Ratio (TTM)

35.8x

Pricey — P/E 35.8

P/E over 35. The market is pricing in heavy, sustained growth.

Cheaper or dearer next year

P/E vs Forward

+13.1

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (35.8 → 22.8)

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Dividends

Not applicable for this business.

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