Penguin Solutions, Inc. (NASDAQ: PENG)

Sector: Technology Industry: Information Technology Services CIK: 0001616533
Market Cap 1.05 Bn
P/B 2.69
P/E 84.13
P/S 0.76
ROIC (Qtr) 4.91
Div Yield % 0.00
Rev 1y % (Qtr) 0.58
Total Debt (Qtr) 523.71 Mn
Debt/Equity (Qtr) 1.34
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About

SMART Global Holdings, Inc. (SGH), a technology company, operates in the computing, memory, and LED industries. The company designs, builds, and manages high-performance, high-availability enterprise solutions, serving a diverse range of customers across various markets. SGH's main business activities revolve around providing specialized solutions in the memory, computing, and LED sectors. The company's operations span across multiple countries, offering a wide range of products and services to its clients. The company generates revenue through...

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Investment thesis

Bull case

  • Healthy cash reserves of 461.45M provide 23.10x coverage of short-term debt 19.97M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 126.32M provides exceptional 36.28x coverage of minority interest expenses 3.48M, showing strong core operations.
  • Strong tangible asset base of 1.37B provides 2.62x coverage of total debt 523.71M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 126.32M provides exceptional 42.73x coverage of interest expenses 2.96M, showing strong debt service capability.
  • Robust free cash flow of 116.29M exceeds capital expenditure of 10.03M by 11.60x, indicating strong organic growth funding capability.

Bear case

  • Investment activities of 40.52M provide weak support for R&D spending of 78.68M, which is 0.51x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of 126.32M shows concerning coverage of stock compensation expenses of 39.73M, with a 3.18 ratio indicating potential earnings quality issues.
  • Operating earnings of 43.91M show weak coverage of depreciation charges of 54.07M, with a 0.81 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 116.29M represents just -0.58x of debt issuance (200.01M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 54.07M relative to operating cash flow of 126.32M, which is 0.43x suggests significant maintenance capital requirements affecting free cash flow.

Geographical Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 229.77 Bn 29.79 2.98 66.57 Bn
2 ACN Accenture plc 136.96 Bn 17.99 1.94 8.20 Bn
3 INFY Infosys Ltd 61.29 Bn 19.41 3.18 0.68 Bn
4 CTSH Cognizant Technology Solutions Corp 31.81 Bn 14.26 1.51 1.15 Bn
5 FIS Fidelity National Information Services, Inc. 28.54 Bn -1.17 2.90 13.00 Bn
6 WIT Wipro Ltd 23.98 Bn 16.25 2.37 2.35 Bn
7 LDOS Leidos Holdings, Inc. 20.68 Bn 14.28 1.20 5.24 Bn
8 BR Broadridge Financial Solutions, Inc. 20.38 Bn 19.09 2.84 3.17 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.70 1.23
EV to Cash from Ops. EV/CFO 8.85 3.12
EV to Debt EV to Debt 2.13 3.45
EV to EBIT EV/EBIT 25.46 -4.05
EV to EBITDA EV/EBITDA 9.77 3.57
EV to Free Cash Flow [EV/FCF] EV/FCF 9.61 -2.69
EV to Market Cap EV to Market Cap 1.07 1.54
EV to Revenue EV/Rev 0.82 47.25
Price to Book Value [P/B] P/B 2.69 3.04
Price to Earnings [P/E] P/E 84.13 4.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.96 -0.59
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 14.14
Dividend per Basic Share Div per Share (Qtr) 0.00 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.61
Interest Coverage Int. cover (Qtr) 14.85 -318.37
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 39.63 -256.13
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 24.62 128.67
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 6.73
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 48.66 -36.77
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 17.53 -22.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 370.90 -87.06
EBT Growth (1y) % EBT 1y % (Qtr) 394.85 75.53
EPS Growth (1y) % EPS 1y % (Qtr) 144.23 122.99
FCF Growth (1y) % FCF 1y % (Qtr) 170.99 -8,761.26
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.35 -4.36
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.86 0.79
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.00
Cash Ratio Cash Ratio (Qtr) 1.01 0.73
Current Ratio Curr Ratio (Qtr) 2.33 2.20
Debt to Equity Ratio Debt/Equity (Qtr) 1.34 0.98
Interest Cover Ratio Int Coverage (Qtr) 14.85 -318.37
Times Interest Earned Times Interest Earned (Qtr) 14.85 -318.37
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.10 -369.53
EBIT Margin % EBIT Margin % (Qtr) 3.20 -585.52
EBT Margin % EBT Margin % (Qtr) 2.99 -637.04
Gross Margin % Gross Margin % (Qtr) 28.60 24.60
Net Profit Margin % Net Margin % (Qtr) 0.90 -639.67