Karooooo (KARO) AI Stock Analysis

Compare

198 Followers

Top Page

Karooooo

(NASDAQ:KARO)

Rating:75Outperform

Price Target:―

Karooooo exhibits strong financial performance and positive earnings call sentiment, supported by significant revenue growth and strategic expansion, particularly in Southeast Asia. While the technical indicators suggest potential downward pressure, the company's robust cash flow and moderate valuation provide a solid foundation for future growth. Minor challenges from currency fluctuations and promotional impacts warrant attention.

Positive Factors

Market Expansion

Southeast Asia is identified as the most compelling growth opportunity due to its large addressable market.

Revenue Growth

Karooooo Logistics revenue is expected to grow double-digits over the next few years.

Negative Factors

Market Risks

The main risks for Karooooo are competition, emerging markets, foreign exchange, customer churn, and stolen vehicle recovery services.

Valuation Concerns

Concerns in the national power grid have led to a 25% discount in the target multiple compared to SaaS peers.

Karooooo (KARO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.69B

Dividend Yield1.98%

Average Volume (3M)19.69K

Price to Earnings (P/E)33.5

Beta (1Y)1.24

Revenue Growth10.07%

EPS Growth31.38%

CountryUS

Employees4,387

SectorTechnology

Sector Strength76

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.52

Shares Outstanding30,893,300

10 Day Avg. Volume26,839

30 Day Avg. Volume19,694

Financial Highlights & Ratios

PEG Ratio5.44

Price to Book (P/B)8.10

Price to Sales (P/S)0.00

P/FCF Ratio59.49

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$51.00

Price Target Upside-6.63% Downside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Karooooo Business Overview & Revenue Model

Company DescriptionKarooooo (KARO) is a global telematics company that provides fleet management solutions to businesses across various sectors. The company operates primarily through its Cartrack brand, offering a comprehensive platform for vehicle tracking, fleet management, and insurance telematics. Karooooo leverages advanced data analytics and machine learning technologies to enhance the efficiency, safety, and productivity of its clients' operations, serving industries such as logistics, transportation, and insurance.

How the Company Makes MoneyKarooooo makes money by offering subscription-based fleet management services through its Cartrack platform. The company's primary revenue stream comes from recurring subscription fees charged to clients for access to its telematics and data analytics services. These services include real-time vehicle tracking, driver behavior analysis, fuel monitoring, and vehicle recovery solutions. Karooooo also generates revenue from hardware sales, such as GPS tracking devices, which are integrated into clients' vehicles. Significant partnerships with insurance companies and automotive manufacturers further contribute to its earnings by expanding its market reach and creating additional revenue opportunities through customized solutions.

Karooooo Financial Statement Overview

Summary

Karooooo demonstrates a strong financial standing with consistent revenue and profit growth, solid margins, and prudent balance sheet management. The company's ability to generate ample cash flow supports its sustainable growth trajectory and investment potential. While the financials reveal strengths in profitability and cash efficiency, continuous monitoring of leverage and market conditions will be crucial.

Income Statement

Very Positive

Karooooo exhibits strong financial performance with a steady increase in revenue and profitability. The gross profit margin stands at 68.8% for TTM, reflecting efficient cost management. The net profit margin is robust at 19.9%, indicating healthy profitability. Revenue growth is impressive, with a 21.6% increase from the previous year, driven by demand for software solutions. The EBIT margin is 27.6% and the EBITDA margin is 32.5%, showcasing solid operational efficiency.

Balance Sheet

Positive

The balance sheet shows a strong equity position with an equity ratio of 61.1%, indicating stability. The debt-to-equity ratio is low at 0.2, suggesting conservative leverage and financial prudence. ROE is healthy at 30.2%, implying effective use of equity to generate profits. Overall, the balance sheet reflects a stable financial position with low risk from debt.

Cash Flow

Very Positive

Operating cash flow is strong, significantly exceeding net income with an operating cash flow to net income ratio of 1.75, indicating efficient cash generation. Free cash flow has grown substantially by 1346.8% from the previous period, reflecting improved cash management and reinvestment capability. The company's cash flow position underscores its ability to fund operations and growth without reliance on external financing.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
4.44B	4.21B	3.51B	2.75B	2.29B	1.94B
	Gross Profit
3.05B	2.69B	2.27B	1.82B	1.62B	1.37B
	EBIT
1.22B	1.04B	881.91M	197.56M	306.56M	630.92M
	EBITDA
1.44B	1.81B	1.51B	694.92M	1.15B	960.54M
	Net Income Common Stockholders
881.09M	738.19M	597.15M	449.95M	497.42M	443.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
921.74M	459.53M	965.79M	731.75M	987.36M	146.59M
	Total Assets
4.79B	4.31B	3.75B	3.09B	2.99B	1.85B
	Total Debt
577.75M	266.81M	181.32M	217.28M	1.03B	130.33M
	Net Debt
-343.98M	-192.72M	-784.47M	-514.46M	46.20M	-16.26M
	Total Liabilities
1.82B	1.30B	1.06B	915.42M	1.71B	620.12M
	Stockholders Equity
2.92B	2.96B	2.66B	2.15B	917.17M	878.22M
Cash Flow		Free Cash Flow
397.27M	27.47M	500.35M	335.26M	407.76M	478.26M
	Operating Cash Flow
1.54B	955.04M	1.13B	931.71M	931.05M	901.22M
	Investing Cash Flow
-984.49M	-932.19M	-615.81M	-658.22M	-524.67M	-427.44M
	Financing Cash Flow
-453.49M	-592.95M	-426.43M	334.97M	390.58M	-368.23M

Karooooo Technical Analysis

Technical Analysis Sentiment

Positive

Last Price54.62

Price Trends

50DMA

43.06

Positive

100DMA

44.56

Positive

200DMA

42.41

Positive

Market Momentum

MACD

3.05

Negative

RSI

73.51

Negative

STOCH

90.67

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Positive. The current price of 54.62 is above the 20-day moving average (MA) of 46.31, above the 50-day MA of 43.06, and above the 200-day MA of 42.41, indicating a bullish trend. The MACD of 3.05 indicates Negative momentum. The RSI at 73.51 is Negative, neither overbought nor oversold. The STOCH value of 90.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KARO.

Karooooo Risk Analysis

Karooooo disclosed 68 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 0 New Risks

Karooooo Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRN	80 Outperform	$752.57M	14.03	29.83%	4.39%	5.09%	12.45%
KARO	75 Outperform	$1.69B	33.49	30.85%	1.98%	10.07%	31.38%
PUBM	70 Outperform	$559.11M	134.55	1.94%	―	3.62%	-53.21%
NABL	68 Neutral	$1.52B	92.31	2.20%	―	7.98%	-40.59%
SPT	63 Neutral	$1.31B	―	-36.95%	―	17.79%	16.49%
MLNK	63 Neutral	$1.29B	―	-6.49%	―	5.15%	28.27%
Sector *	60 Neutral	$11.56B	10.24	-7.04%	2.94%	7.46%	-10.54%

* Technology Sector Average

Performance Comparison

KARO

Karooooo

53.47

25.33

90.01%

ITRN

Ituran Location And Control

37.07

11.78

46.58%

SPT

Sprout Social

21.55

-10.52

-32.80%

PUBM

PubMatic

11.41

-11.67

-50.56%

NABL

N-able

7.82

-4.83

-38.18%

MLNK

MeridianLink

16.13

-2.81

-14.84%

Karooooo Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q4-2025)

% Change Since: 21.65%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Positive

Karooooo demonstrated strong financial performance and subscriber growth, particularly through its Cartrack segment and geographic expansion. However, there were challenges with free cash flow and subscriber additions in the APAC region. The company maintained a strong balance sheet but did not declare a dividend. The highlights outweigh the lowlights, indicating a positive outlook overall.

Q4-2025 Updates

Positive Updates

Strong Financial Performance

Cartrack generated ZAR4.1 billion in subscription revenue, an increase of 15% or 19% on a US dollar basis, with an operating profit margin of 31%. Karooooo's adjusted earnings per share increased 39% to ZAR9.48.

Continued Subscriber Growth

Cartrack's subscriber growth rate was 17% for FY '25, a 200 basis point acceleration compared to FY '24. Net subscriber additions increased 25% in Q4 and 30% for FY '25.

Robust Geographic Expansion

Southeast Asia's constant currency revenue growth accelerated to 31% in Q4, with strong subscriber growth in Europe at 20%.

Successful Product Launch

Launch of the Cartrack Tag in Southern Africa, offering advanced asset protection and operational oversight.

Strong Balance Sheet

Karooooo ended the quarter with net cash and cash equivalents of ZAR838 million, maintaining a strong and unleveraged balance sheet.

Negative Updates

Decline in Free Cash Flow

Adjusted free cash flow decreased due to increased capital expenditure and strategic investments.

Lower APAC Subscriber Additions

Total APAC net subscribers added in FY '25 were slightly down compared to FY '24 levels.

No Immediate Dividend Declaration

Despite a strong cash position, no dividend was declared at the end of FY '25.

Company Guidance

During the call, Karooooo provided comprehensive guidance for fiscal year 2026, highlighting its strategic priorities and financial expectations. The company anticipates Cartrack subscription revenue to reach between ZAR4,700 million and ZAR4,900 million, indicating a growth of 16% to 21%. Cartrack's operating profit margin is projected to range from 26% to 31%, while Karooooo's earnings per share are expected to be between ZAR32.5 and ZAR35.5. Despite planned upfront investments in sales and marketing, the company aims to sustain strong growth, driven by expanding its distribution footprint and increasing platform adoption. Karooooo also emphasized its commitment to disciplined capital allocation and innovation, with a focus on organic growth, and maintaining a strong balance sheet with net cash and cash equivalents of ZAR838 million. The company expects to continue leveraging its SaaS platform to enhance operational efficiency across its markets, with a particular emphasis on growth in Southeast Asia and Europe.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.