Karooooo Ltd. (KARO)
NASDAQ:KARO
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Karooooo
(NASDAQ:KARO)
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Rating:65Neutral
Price Target:
$48.00
▼(-10.03% Downside)
Action:Downgraded
Date:05/15/26
The score is driven primarily by solid underlying profitability and a positive FY27 outlook from management, partially offset by recent financial trend risks (FY26 revenue decline, margin softening, higher leverage, and volatile/free cash flow) and weak technical momentum (below key moving averages with bearish MACD). Valuation is supportive but not clearly cheap.
Positive Factors
Recurring subscription scale
Accelerating ARR and expanding subscriber base provide durable revenue visibility and high recurring cash flow. Scale across geographies and record net additions improve unit economics and upsell opportunities, supporting predictable growth and customer lock-in over the next 2–6 months.
Negative Factors
Recent revenue decline & margin softness
A year-over-year revenue decline and softer margins signal decelerating top-line momentum and margin compression risk. If sustained, slower revenue growth complicates reinvestment and EPS expansion targets, forcing tougher trade-offs between growth investments and margin restoration over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription scale
Accelerating ARR and expanding subscriber base provide durable revenue visibility and high recurring cash flow. Scale across geographies and record net additions improve unit economics and upsell opportunities, supporting predictable growth and customer lock-in over the next 2–6 months.
Read all positive factors
Karooooo Key Performance Indicators (KPIs)
Any
Operating Income by Segment
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Data provided by:
The Fly
The FlyKarooooo (KARO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend Yield2.66%
Average Volume (3M)105.17K
Price to Earnings (P/E)24.1
Beta (1Y)1.25
Revenue Growth25.80%
EPS Growth12.70%
CountryUS
Employees4,387
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)32.05
Shares Outstanding30,893,300
10 Day Avg. Volume81,873
30 Day Avg. Volume105,169
Financial Highlights & Ratios
PEG Ratio2.95
Price to Book (P/B)7.01
Price to Sales (P/S)4.24
P/FCF Ratio0.00
Enterprise Value/Market Cap16.23
Enterprise Value/Revenue4.36
Enterprise Value/Gross Profit6.42
Enterprise Value/Ebitda16.64
Forecast
1Y Price Target
$61.00Price Target Upside14.34% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)38.82
Revenue Forecast (FY)$6.48B
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...
How the Company Makes Money
Karooooo primarily makes money through recurring subscription fees for access to its Cartrack SaaS platform, typically bundled with the use of connected telematics/IoT hardware installed in customer vehicles or assets. Key revenue streams generall...
Karooooo Earnings Call Summary
Earnings Call Date:May 13, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jul 16, 2026
Earnings Call Sentiment Positive
The call emphasized strong, accelerating top-line SaaS metrics (ARR, subscription revenue, subscriber growth), exceptional free cash flow generation (+90%) and continued high retention and unit economics (LTV:CAC >9x, 95% retention), while acknowledging near-term margin pressure from a large device provision, elevated sales & marketing investments, FX translation effects and rising component costs. Management positioned the investments as deliberate and aimed at durable future growth and forecasted resumed subscription revenue acceleration and EPS growth in FY'27 despite a modest margin contraction in guidance.Positive Updates
ARR Growth
Annual Recurring Revenue (ARR) increased 18% to ZAR 5,179 million and 38% in U.S. dollars to USD 325 million, reflecting accelerating subscription momentum despite FX headwinds.
Negative Updates
Gross Margin Compression & Cost of Sales Increase
Cartrack gross profit margin declined to ~70% (from 75% the prior comparable quarter) and subscription gross margin was 71%. Q4 cost of sales rose materially due to a provision/alignment related to in-vehicle IoT device depreciation and a reported ~45% increase in the provision for devices, which contributed to near-term margin pressure.
Read all updates
Q4-2026 Updates
Positive
Negative
ARR Growth
Annual Recurring Revenue (ARR) increased 18% to ZAR 5,179 million and 38% in U.S. dollars to USD 325 million, reflecting accelerating subscription momentum despite FX headwinds.
Read all positive updates
Company Guidance
For FY‑27 management guided Cartrack subscription revenue of ZAR 5,700–6,000 million (implying ~18%–24% growth vs FY‑26 Cartrack subscription revenue of ZAR 4,831m), Cartrack gross profit margin of 70%–72%, Cartrack operating profit margin of 27%–30%, and Group adjusted earnings per share of ZAR 38.5–40 (the midpoint implies ~21% EPS growth versus FY‑26 adjusted EPS of ZAR 32.55, excluding secondary offering costs); they said they will slow hiring while driving sales‑force efficiency and AI adoption to accelerate subscription growth and EPS expansion, reiterating confidence in their cash generation and unit economics after FY‑26 adjusted free cash flow of ZAR 809m and net cash of ZAR 746m.Karooooo Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
62
Positive
| Breakdown | Feb 2026 | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.48B | 4.57B | 4.21B | 3.51B | 2.75B |
| Gross Profit | 3.72B | 3.20B | 2.69B | 2.27B | 1.82B |
| EBITDA | 2.09B | 2.06B | 1.81B | 1.51B | 1.26B |
| Net Income | 993.92M | 921.03M | 738.19M | 597.15M | 449.95M |
Balance Sheet | |||||
| Total Assets | 5.85B | 5.10B | 4.27B | 3.72B | 3.04B |
| Cash, Cash Equivalents and Short-Term Investments | 1.16B | 1.05B | 456.03M | 957.38M | 719.21M |
| Total Debt | 1.15B | 727.53M | 263.86M | 179.14M | 211.46M |
| Total Liabilities | 2.49B | 1.84B | 1.29B | 1.05B | 899.74M |
| Stockholders Equity | 3.31B | 3.21B | 2.94B | 2.64B | 2.11B |
Cash Flow | |||||
| Free Cash Flow | 0.00 | 928.88M | 80.15M | 595.43M | 387.59M |
| Operating Cash Flow | 1.81B | 1.97B | 972.78M | 1.23B | 952.64M |
| Investing Cash Flow | -1.11B | -1.10B | -949.50M | -677.29M | -740.88M |
| Financing Cash Flow | -649.35M | -452.00M | -603.97M | -457.21M | -442.92M |
Karooooo Technical Analysis
Negative
53.35
Price Trends
48.97
Negative
48.17
Negative
48.52
Negative
Market Momentum
-0.56
Negative
47.39
Neutral
84.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Negative. The current price of 53.35 is above the 20-day moving average (MA) of 48.14, above the 50-day MA of 48.97, and above the 200-day MA of 48.52, indicating a bearish trend. The MACD of -0.56 indicates Negative momentum. The RSI at 47.39 is Neutral, neither overbought nor oversold. The STOCH value of 84.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KARO.
Karooooo Risk Analysis
Karooooo disclosed 70 risk factors in its most recent earnings report. Karooooo reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Our use of AI and generative AI tools presents risks and challenges that could adversely affect our business and require that we incur substantial costs Q1, 2025
2.
Under certain attribution rules, our non-U.S. subsidiaries are expected to be treated as controlled foreign corporations for U.S. federal income tax purposes, and, as a result, there could be adverse U.S. federal income tax consequences to U.S. investors that own our shares (directly or indirectly) and are treated as "Ten Percent Shareholders." Q1, 2025
Karooooo Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $449.89M | -11.62 | -19.29% | ― | 12.27% | 37.41% | |
65 Neutral | $1.47B | 24.07 | 30.79% | 2.66% | 25.80% | 12.70% | |
63 Neutral | $1.14B | -127.42 | 32.36% | ― | 13.03% | 7.07% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
53 Neutral | $1.04B | -11.64 | -35.68% | ― | 16.36% | 10.40% |
* Technology Sector Average
KARO
Karooooo
47.70
-6.12
-11.37%
SPT
Sprout Social
7.48
-14.22
-65.53%
PRCH
Porch Group
10.42
1.07
11.44%
AMPL
Amplitude
7.82
-4.37
-35.85%
Karooooo Corporate Events
Karooooo Posts Record FY 2026 Results and Hikes Dividend as Cartrack Growth Accelerates
May 13, 2026
On May 13, 2026, Karooooo reported record subscription revenue, operating income and adjusted earnings per share for the fourth quarter and fiscal year ended February 28, 2026, driven by robust growth at Cartrack and Karooooo Logistics. Cartrack&#...
Karooooo Sets May 13 Date to Report Q4 and Full-Year 2026 Results
May 5, 2026
Karooooo Limited, a Singapore-based operational intelligence cloud provider that owns 100% of Cartrack and 81% of Karooooo Logistics, helps commercial customers manage fleets, fuel, assets, logistics, workforce, safety, and compliance across more ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.