Snap (NYSE:SNAP) versus Penguin Solutions (NASDAQ:PENG) Critical Review

Penguin Solutions (NASDAQ:PENG) and Snap (NYSE:SNAP) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Institutional and Insider Ownership

47.5% of Snap shares are held by institutional investors. 2.9% of Penguin Solutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Penguin Solutions has a beta of 2.83, indicating that its stock price is 183% more volatile than the S&P 500. Comparatively, Snap has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Valuation and Earnings

This table compares Penguin Solutions and Snap”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Penguin Solutions	$1.37 billion	1.80	$25.39 million	$1.41	34.13
Snap	$5.93 billion	1.36	-$460.49 million	($0.24)	-19.85

Penguin Solutions has higher earnings, but lower revenue than Snap. Snap is trading at a lower price-to-earnings ratio than Penguin Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Penguin Solutions and Snap’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Penguin Solutions	6.44%	28.23%	6.58%
Snap	-6.72%	-18.92%	-5.44%

Analyst Recommendations

This is a summary of current ratings and price targets for Penguin Solutions and Snap, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Penguin Solutions	1	1	6	1	2.78
Snap	2	25	8	1	2.22

Penguin Solutions presently has a consensus target price of $63.33, suggesting a potential upside of 31.59%. Snap has a consensus target price of $7.23, suggesting a potential upside of 51.74%. Given Snap’s higher probable upside, analysts clearly believe Snap is more favorable than Penguin Solutions.

Summary

Penguin Solutions beats Snap on 10 of the 14 factors compared between the two stocks.

About Penguin Solutions

Penguin Solutions, Inc. engages in the designing and development of enterprise solutions worldwide. It operates through three segments: Advanced Computing, Integrated Memory, and Optimized LED. It offers dynamic random access memory modules, solid-state and flash storage, and other advanced integrated memory solutions for networking and telecom, data analytics, artificial intelligence and machine learning applications; and supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging services. The company also provides Penguin Computing that focus on technical computing for core and cloud environments through high-performance computing and AI solutions; and Penguin Edge, an edge computing solution for embedded and wireless applications, such as high-performance products for government, health care, manufacturing, and telecommunications applications. In addition, it offers Stratus, which provides simplified, protected, and autonomous fault tolerant computing solutions in the data center and at the Edge through hardware and software services; and solutions to education, energy, financial services, government, hyperscale, and manufacturing markets. Further, the company provides LED chip products comprising blue and green LED chips based on gallium nitride, and related materials under Cree LED brand; and surface mount devices under the Cree LED XLamp and J Series brands. It sells its products directly to original equipment manufacturers, enterprise, government and other end customers through direct sales force, e-commerce, customer service representatives, on-site field application engineers, independent sales representatives, distributors, integrators, and resellers. 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 based in Grand Cayman, Cayman Islands.

About Snap

Snap Inc. operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight that enable people to communicate visually through short videos and images. It also provides Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective; and advertising products, including AR ads and Snap ads comprises a single image or video ads, collection ads, dynamic ads, story ads, and commercials. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Santa Monica, California.