A strong stock as of late has been Penguin Solutions, Inc. (PENG). Shares have been marching higher, with the stock up 76.3% over the past month. The stock hit a new 52-week high of $39.66 in the previous session. Penguin Solutions, Inc. has gained 99.3% since the start of the year compared to the 15% gain for the Zacks Computer and Technology sector and the -13.3% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on April 2, 2026, Penguin Solutions, Inc. reported EPS of $0.52 versus consensus estimate of $0.43 while it beat the consensus revenue estimate by 3.21%.
For the current fiscal year, Penguin Solutions, Inc. is expected to post earnings of $2.18 per share on $1.53 in revenues. This represents a 14.74% change in EPS on a 11.93% change in revenues. For the next fiscal year, the company is expected to earn $2.5 per share on $1.77 in revenues. This represents a year-over-year change of 14.68% and 15.2%, respectively.
Valuation Metrics
While Penguin Solutions, Inc. has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Penguin Solutions, Inc. has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 17.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 18.9X. On a trailing cash flow basis, the stock currently trades at 13.5X versus its peer group's average of 18.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Penguin Solutions, Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Penguin Solutions, Inc. meets the list of requirements. Thus, it seems as though Penguin Solutions, Inc. shares could have potential in the weeks and months to come.
How Does PENG Stack Up to the Competition?
Shares of PENG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Cognyte Software Ltd. (CGNT). CGNT has a Zacks Rank of #1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Cognyte Software Ltd. beat our consensus estimate by 900.00%, and for the current fiscal year, CGNT is expected to post earnings of $0.48 per share on revenue of $448 million.
Shares of Cognyte Software Ltd. have gained 20.5% over the past month, and currently trade at a forward P/E of 22.02X and a P/CF of 57.8X.
The Internet - Software industry is in the top 38% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PENG and CGNT, even beyond their own solid fundamental situation.
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This article originally published on Zacks Investment Research (zacks.com).