Financial Comparison: Penguin Solutions (NASDAQ:PENG) and Kingsoft Cloud (NASDAQ:KC)

Penguin Solutions (NASDAQ:PENG) and Kingsoft Cloud (NASDAQ:KC) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Volatility and Risk

Penguin Solutions has a beta of 2.89, meaning that its stock price is 189% more volatile than the S&P 500. Comparatively, Kingsoft Cloud has a beta of 1.94, meaning that its stock price is 94% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Penguin Solutions	4.07%	19.94%	5.33%
Kingsoft Cloud	-9.38%	-11.67%	-3.59%

Analyst Ratings

This is a breakdown of recent ratings for Penguin Solutions and Kingsoft Cloud, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Penguin Solutions	0	4	6	0	2.60
Kingsoft Cloud	1	1	4	0	2.50

Penguin Solutions presently has a consensus target price of $36.88, indicating a potential downside of 38.40%. Kingsoft Cloud has a consensus target price of $18.53, indicating a potential upside of 58.54%. Given Kingsoft Cloud’s higher probable upside, analysts clearly believe Kingsoft Cloud is more favorable than Penguin Solutions.

Valuation & Earnings

This table compares Penguin Solutions and Kingsoft Cloud”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Penguin Solutions	$1.35 billion	2.25	$25.39 million	$0.72	83.14
Kingsoft Cloud	$1.37 billion	2.58	-$133.88 million	($0.47)	-24.87

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

Institutional & Insider Ownership

13.4% of Kingsoft Cloud shares are held by institutional investors. 2.9% of Penguin Solutions shares are held by insiders. Comparatively, 14.2% of Kingsoft Cloud shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Penguin Solutions beats Kingsoft Cloud on 9 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 Kingsoft Cloud

Kingsoft Cloud Holdings Limited provides cloud services to businesses and organizations primarily in China. The company's products portfolio includes cloud products, including infrastructure as a service (IaaS) infrastructure, platform as a service (PaaS) middleware, and software as a service (SaaS) applications that primarily consist of cloud computing, network, database, big data, security, storage, and delivery solutions. It offers research and development services, as well as enterprise digital solutions and related services. The company also provides public cloud services to customers in various verticals, including video, e-commerce, intelligent mobility, artificial intelligence, and mobile internet; and enterprise cloud services to customers in financial services, public service, and healthcare businesses. Kingsoft Cloud Holdings Limited was incorporated in 2012 and is headquartered in Beijing, the People's Republic of China.