Karooooo (KARO) AI Stock Analysis

• Market Cap: $1.50B
• Dividend Yield: 2.66%
• Average Volume (3M): 37.76K
• Price to Earnings (P/E): 26.4
• Beta (1Y): 1.23
• Revenue Growth: 18.30%
• EPS Growth: 22.19%
• Country: US
• Employees: 4,387
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.53
• Shares Outstanding: 30,893,300
• 10 Day Avg. Volume: 52,055
• 30 Day Avg. Volume: 37,756
• PEG Ratio: 1.25
• Price to Book (P/B): 8.12
• Price to Sales (P/S): 5.71
• P/FCF Ratio: 28.08
• Enterprise Value/Market Cap: 16.23
• Enterprise Value/Revenue: 4.64
• Enterprise Value/Gross Profit: 6.70
• Enterprise Value/Ebitda: 10.96
• 1Y Price Target: $57.50
• Price Target Upside: 18.41% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 2.03
• Revenue Forecast (FY): $336.76M

• Rating: 79 Outperform
• Price Target: $57.00 ▲(17.38% Upside)

KARO scores well primarily on strong underlying profitability and the earnings-call-driven outlook, including raised subscription guidance, accelerating ARR, high retention, and solid unit economics supported by net cash. The score is moderated by uneven free cash flow conversion/volatility, signs of recent financial growth deceleration in the statements, and a valuation that is not especially cheap despite the supportive dividend.

Positive Factors

Recurring Revenue & ARR Growth

Karooooo's SaaS subscription model delivered accelerating ARR and record net subscriber additions, giving durable, predictable revenue streams. High recurring revenue and scale of ~2.6m subscribers support long-term revenue visibility, better forecasting, and organic upsell opportunities.

Strong Unit Economics

High subscription gross margins and an LTV:CAC above 9x indicate robust per-customer economics that sustain profitability as the business scales. Durable unit economics allow the company to invest in growth while preserving long-term margin expansion and attractive capital returns.

Balance Sheet & Cash Generation

A net cash position and improving adjusted free cash flow provide financial flexibility to fund strategic investments, tolerate temporary margin pressure, and return capital. Strong operating cash flow coverage of net income supports sustainable operations and lowers refinancing risk.

Negative Factors

Free Cash Flow Volatility

Volatile free cash flow conversion reduces the predictability of internally generated funds for investments or returns. Even with strong operating cash flow in aggregate, swings in FCF from reinvestment and working capital make capital allocation and dividend/shareholder planning more uncertain over time.

Large S&M Ramp & Execution Risk

A rapid, sizable increase in sales and marketing spending stresses hiring, onboarding, and channel execution. If recruitment or go-to-market scale-up lags, ROI may disappoint and margins could remain pressured, risking longer-term growth targets and capital efficiency.

ARPU Dilution from Low-ARPU Expansion

Expanding into lower-ARPU markets can structurally reduce group ARPU and compress per-subscriber revenue unless offset by upsells or higher-value offerings. Persistent ARPU dilution could limit margin expansion and require more customers to achieve the same revenue growth.

Karooooo Business Overview & Revenue Model

Company Description

Karooooo Ltd. provides mobility software-as-a-service (SaaS) platform for connected vehicles in South Africa, rest of Africa, Europe, the Asia-Pacific, the Middle East, and the United States. The company offers Fleet Telematics, a fleet management SaaS platform that provides real-time insights; LiveVision, which offers pro-active risk management and fleet visibility; MiFleet advanced fleet administration and business intelligence that provides cost management and administration capability services; and Karooooo Logistics, a software application for management of last mile delivery and general operational logistics. It also provides Cartrack Field Service, a software application for management of field and on site workers; Business Intelligence for high-level view of fleet statistics; asset tracking for tracking and tracing moveable assets; asset recovery services that assists vehicle owners and insurance companies with the recovery of vehicles and other assets; and insurance telematics that allows insurers to tailor premiums for commercial and consumer customers using analytics; Protector, a safety package for consumer vehicles; and Car Watch, a mobile application that lets users track and watch their vehicles. In addition, the company offers specialist mobility solutions that include Bike Track, a GPS-based solution for commercial motorbike fleets; Credit Management that predicts payment cycles and facilitate active credit management for asset-based vehicle finance; electronic monitoring services application that allows law enforcement agencies to monitor persons of interest; and mobility and monitoring solutions, such as Carzuka, cartrack insurance agency, and on-demand rideshare taxi application, as well as smart IoT products. It provides its solutions through direct sales force to consumers and sole proprietors, small and medium-sized businesses, large enterprises, and other connected devices. Karooooo Ltd. was founded in 2001 and is headquartered in Singapore.

How the Company Makes Money

Karooooo generates revenue primarily through subscription fees for its software services. The company offers tiered pricing models based on the number of vehicles being monitored, with additional charges for premium features and advanced analytics. Key revenue streams include monthly and annual subscriptions from fleet management clients, as well as ancillary services such as maintenance and support. Significant partnerships with automotive manufacturers and integration with third-party applications also contribute to its earnings, expanding its market reach and enhancing the value of its service offerings.

Karooooo Financial Statement Overview

Summary

Strong profitability (TTM gross margin ~69%, net margin ~20%) and solid operating cash flow that exceeds net income support earnings quality. Offsetting factors are a slowdown in recent revenue/earnings momentum and volatile/weaker free cash flow conversion in the latest TTM, plus some historical balance-sheet volatility despite currently manageable leverage.

Income Statement

KARO shows strong profitability and resilient margins: TTM (Trailing-Twelve-Months) gross margin is ~69% and net margin is ~20%, with healthy operating profitability as well. Revenue has grown meaningfully over the last several years, but the growth rate has slowed in the most recent periods (TTM growth ~4.5% vs. much higher growth in earlier years). Net income also dipped in the latest TTM versus the most recent annual period, signaling some near-term deceleration despite still-strong profitability.

Balance Sheet

Leverage appears manageable with low debt relative to equity in the most recent periods (debt-to-equity around ~0.22), and returns on equity remain strong (~29–32%), indicating effective capital use. The main concern is volatility in equity and capital structure over time (notably much higher leverage in 2021), which suggests the balance sheet has not been consistently structured and could be more sensitive if operating conditions weaken.

Cash Flow

Cash generation is generally solid: TTM (Trailing-Twelve-Months) operating cash flow is strong and exceeds net income (coverage ~1.13), supporting earnings quality. Free cash flow, however, has been volatile across years and the latest TTM shows weaker conversion from profits into free cash flow (TTM free cash flow materially lower than net income, and the provided TTM free-cash-flow-to-net-income value is 0), implying heavier reinvestment and/or working-capital swings that reduce cash available to shareholders.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.57B	4.21B	3.51B	2.75B	2.06B
Gross Profit	3.20B	2.69B	2.27B	1.82B	1.46B
EBITDA	2.07B	1.83B	1.51B	1.26B	1.03B
Net Income	921.03M	751.90M	597.15M	449.95M	285.97M
Balance Sheet
Total Assets	5.10B	4.27B	3.72B	3.04B	2.86B
Cash, Cash Equivalents and Short-Term Investments	1.05B	456.03M	957.38M	719.21M	967.58M
Total Debt	727.53M	263.86M	179.14M	211.46M	1.00B
Total Liabilities	1.84B	1.29B	1.05B	899.74M	1.60B
Stockholders Equity	3.21B	2.94B	2.64B	2.11B	838.18M
Cash Flow
Free Cash Flow	928.88M	80.15M	595.43M	387.59M	413.27M
Operating Cash Flow	1.97B	972.78M	1.23B	952.64M	842.91M
Investing Cash Flow	-1.10B	-949.50M	-677.29M	-740.88M	-475.67M
Financing Cash Flow	-452.00M	-603.97M	-457.21M	-442.92M	-426.42M

Karooooo Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 48.56
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Neutral. The current price of 48.56 is above the 20-day moving average (MA) of 47.54, above the 50-day MA of 46.70, and above the 200-day MA of 48.27, indicating a neutral trend. The MACD of 0.78 indicates Negative momentum. The RSI at 51.08 is Neutral, neither overbought nor oversold. The STOCH value of 41.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KARO.

Karooooo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KARO	79 Outperform	$1.50B	26.39	32.71%	2.66%	18.30%	22.19%
JAMF	62 Neutral	$1.75B	-41.36	-5.48%	―	12.28%	42.19%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
SPT	61 Neutral	$476.64M	-9.75	-26.69%	―	13.09%	32.34%
PRCH	57 Neutral	$719.69M	26.23	―	―	-2.13%	―
AMPL	52 Neutral	$1.06B	-9.20	-37.47%	―	12.78%	-20.47%

Karooooo Corporate Events

Karooooo Posts Accelerating Q3 ARR and Revenue Growth, Lifts FY26 Outlook

On January 20, 2026, Karooooo reported unaudited results for its third quarter of fiscal 2026, covering the period ended November 30, 2025, highlighting accelerating growth across its subscription and logistics businesses. Cartrack’s subscription revenue rose 20% year-on-year to ZAR1.24 billion and SaaS annualized recurring revenue climbed 22% to ZAR5.11 billion (USD298 million), with record net subscriber additions driving a 16% increase in its base to about 2.57 million users. Group subscription revenue increased 20% to ZAR1.24 billion, while Karooooo Logistics’ delivery-as-a-service revenue grew 24% to ZAR135 million, underpinning consolidated revenue growth of 22%. Operating profit advanced 14% to ZAR369 million and adjusted earnings per share rose 11% to ZAR8.54, even as operating margins moderated slightly amid heavier growth-related spending. Management emphasized that higher investment in sales, marketing and distribution is intended to sustain the current acceleration in annual recurring revenue and support long-term shareholder value, and the company raised the midpoint of its fiscal 2026 revenue outlook, signaling confidence in continued momentum.

The most recent analyst rating on (KARO) stock is a Buy with a $60.00 price target. To see the full list of analyst forecasts on Karooooo stock, see the KARO Stock Forecast page.

Karooooo Sets January 20 Date for Third Quarter 2026 Results

On January 12, 2026, Karooooo Limited announced that it plans to release its Third Quarter 2026 financial results on January 20, 2026, after the U.S. market close, and will host a follow-up Zoom webinar on January 21, 2026 to discuss the numbers with investors. The scheduled release and investor call underscore the company’s ongoing engagement with the market and will give stakeholders a timely update on its operational and financial performance as it continues to scale its digital operations and logistics platforms across multiple geographies.

The most recent analyst rating on (KARO) stock is a Buy with a $55.00 price target. To see the full list of analyst forecasts on Karooooo stock, see the KARO Stock Forecast page.