A forensic read on Penguin Solutions, Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
D · Weak — demands caution
Forensic grade
Safe
Financial health
3.4
Distress distance
Watch
Earnings quality
6
Forensic signals
39.5%
ROE
26.5%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (auditor quality, say on pay, board independence, going concern). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Penguin Solutions, Inc. earns a D (Weak — demands caution) forensic quality grade, and its balance-sheet distress test reads 3.4, placing it in the Safe zone. 6 forensic signals were flagged in its latest SEC filings, led by cash conversion.
What the filings flag
0.20×
FY2024–FY2026
Cash conversion.Over FY2024–FY2026, cumulative operating cash flow was 0.20× cumulative net income before $16.1M of non-cash goodwill impairment. Reported profit is not turning into cash. The shortfall is profit tied up in working capital rather than collected — the accrual and receivables lines below show where.Cash conversion: operating cash flow divided by net income, the share of profit that arrived as cash.
+35.4%
FY2025→FY2026
Accruals ratio (% of NOA).Net operating assets grew +35.4% relative to their own average in FY2026 — scaled by NOA itself, not by total assets, which is what the Forensic Screens card's own accrual row divides by. Accruals are building sharply — a large slice of profit sits in operating assets, not cash. An accrual is a claim that still has to be collected or written down, so the gap resolves in a later period whichever way it goes. The build is led by inventory up +193% against +29% in cost of sales and receivables up +159% against revenue +26%. A cash-flow measure on the same base agrees: reported earnings ran ahead of operating cash by 44% of net operating assets, against an accruals ratio of 35.4%. The two are computed differently: the accruals ratio is the change in net operating assets over average net operating assets, while the cash-flow figure is net income less operating cash flow over that same average.Accruals ratio: the year-over-year change in net operating assets, relative to their own average.NOA (net operating assets): the money tied up in running the business, operating assets minus operating liabilities.
146d
FY2025→FY2026
Inventory days.Days inventory outstanding moved from 76 to 146 FY2025→FY2026 (against cost of goods sold; inventory +193% vs +29% in cost of sales). Inventory is outrunning what's being sold — a flag for softening demand or obsolescence risk ahead.
+5.9%/yr
FY2024–FY2026
Share-count dilution.Diluted share count changed +12% over the last 2 years to FY2026 (+5.9%/yr). The count is growing — 52.4M shares in FY2024, 58.8M in FY2026: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~5.9% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2024 has been diluted ~11%.
1.8% of rev
FY2026
Stock-based comp load.Stock-based compensation ran 1.8% of revenue in FY2026 — about $0.54 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 5.9% a year across FY2024–FY2026 and that rate is not falling, so total profit has to grow by that much annually before any of it reaches a share. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
FCF ($163M)
FY2026
Shareholder returns.Returned $74M to shareholders (buybacks + dividends) in FY2026, but free cash flow was ($163M) after capex — there was no free cash flow to fund the payout from at all, and operating cash flow itself was negative or zero that year too. The entire return is coming from debt or cash reserves, not cash the business itself generated — a harder case than returns merely running ahead of free cash flow, since here there was none to run ahead of.
Key fundamentals
Latest Revenue$1.73B
Revenue Growth YoY+26.5%
Revenue CAGR (2yr)+21.6%
Net Margin10.4%
Free Cash Flow-$163.5M
Return on Equity39.5%
Debt / Equity1.52x
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Penguin Solutions, Inc.'s actual 10-K/10-Q/8-K filings?