Karat Packaging Inc (KRT) AI Stock Analysis

• Market Cap: $502.69M
• Dividend Yield: 7.94%
• Average Volume (3M): 79.95K
• Price to Earnings (P/E): 16.7
• Beta (1Y): 1.19
• Revenue Growth: 8.93%
• EPS Growth: 6.82%
• Country: US
• Employees: 683
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Packaging & Containers
• EPS (TTM): 0.37
• Shares Outstanding: 20,099,504
• 10 Day Avg. Volume: 74,130
• 30 Day Avg. Volume: 79,952
• PEG Ratio: -2.53
• Price to Book (P/B): 3.89
• Price to Sales (P/S): 1.43
• P/FCF Ratio: 13.78
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 1.24
• Enterprise Value/Gross Profit: 3.27
• Enterprise Value/Ebitda: 8.86
• 1Y Price Target: $28.50
• Price Target Upside: 13.95% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3
• EPS Forecast (FY): 1.81
• Revenue Forecast (FY): $517.18M

• Rating: 69 Neutral
• Price Target: $27.00 ▲(7.96% Upside)

Karat Packaging Inc's overall stock score reflects a balance of strengths and challenges. The most significant factor is the solid financial performance with stable revenue growth, though profitability and cash flow management need improvement. The valuation is attractive with a reasonable P/E ratio and high dividend yield. Technical analysis indicates a bearish trend, while the earnings call suggests confidence in future growth despite current financial pressures.

Positive Factors

Sustained Revenue Growth

Consistent double-digit top-line growth driven by volume, pricing and product mix indicates durable demand for core packaging products. This revenue momentum supports capacity utilization, incremental operating leverage, and funds organic expansion initiatives over the next 2–3 years.

Strategic Paper Bag Expansion

Winning a sizable, expandable paper bag contract diversifies product mix into higher-growth sustainable packaging, providing a multi-year revenue runway. Scaling this business leverages manufacturing capability and can materially increase recurring revenue and margin stability over the medium term.

Balanced Capital Structure

A moderate debt load with a 0.43 D/E ratio gives financial flexibility to invest in growth, fund the paper bag rollout, maintain dividends, and execute buybacks without overleveraging. This capital structure supports resilience through cyclical swings.

Negative Factors

Weak Free Cash Flow Trend

A steep drop in free cash flow and low OCF-to-net-income conversion reduces internal funding for capex, dividends and expansion. Persistent cash generation weakness increases reliance on external financing and limits resilience to sustained cost or demand shocks.

Low Net Profitability

A very low net margin implies high operating, SG&A, or other non-production costs eroding profitability. This constrains retained earnings, weakens ROE, and reduces the firm's ability to absorb input cost inflation or to fund long-term strategic investments without margin improvement.

Margin Compression Risk

Material gross margin decline driven by import duties and tariffs highlights exposure to supply chain and input-cost pressures. If higher duties or import costs persist, margins and operating cash flow remain vulnerable unless offset by pricing, local sourcing, or efficiency gains.

Karat Packaging Inc Business Overview & Revenue Model

Company Description

Karat Packaging Inc. manufactures and distributes single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company offers its products to domestic and regional distributors, restaurant chains, retail establishments, and online customers. It also provides new product development, design, printing, and logistics services. Karat Packaging Inc. was founded in 2000 and is based in Chino, California.

How the Company Makes Money

Karat Packaging generates revenue primarily through the sale of its disposable foodservice products to a diverse customer base, including restaurants, food distributors, and retail chains. The company's revenue model is built on direct sales, wholesale distribution, and long-term contracts with key clients, which provide stable income streams. Additionally, Karat Packaging capitalizes on the increasing consumer preference for environmentally friendly products by offering sustainable packaging solutions, enabling them to tap into a growing market segment. Strategic partnerships with suppliers and distributors further enhance their market reach and drive sales. Overall, Karat Packaging's ability to innovate and adapt to market trends contributes significantly to its earnings.

Karat Packaging Inc Financial Statement Overview

Summary

Karat Packaging Inc demonstrates solid revenue growth and operational efficiency, but faces challenges in net profitability and cash flow management. The balance sheet is stable with a balanced leverage approach. Overall, the company is on a steady growth trajectory but needs to address profitability and cash flow concerns to enhance financial health.

Income Statement

Karat Packaging Inc shows a stable revenue growth trend with a TTM revenue growth rate of 2.66%. The gross profit margin is healthy at 38.04%, indicating efficient production processes. However, the net profit margin is relatively low at 1.12%, suggesting potential cost management issues. The EBIT and EBITDA margins are moderate at 7.34% and 9.96% respectively, reflecting decent operational efficiency.

Balance Sheet

The company maintains a reasonable debt-to-equity ratio of 0.43, indicating a balanced approach to leveraging. The return on equity is modest at 3.25%, suggesting room for improvement in generating returns for shareholders. The equity ratio is stable, reflecting a solid financial structure.

Cash Flow

The cash flow statement reveals a significant decline in free cash flow growth at -51.39%, which is concerning. The operating cash flow to net income ratio is 0.34, indicating moderate cash generation from operations. The free cash flow to net income ratio is strong at 97.15%, suggesting efficient conversion of profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	453.77M	422.63M	405.65M	422.96M	364.24M	295.52M
Gross Profit	172.61M	164.33M	153.04M	132.09M	107.83M	89.13M
EBITDA	63.69M	61.12M	60.78M	48.76M	40.48M	34.42M
Net Income	30.28M	29.98M	32.47M	23.65M	20.78M	17.52M
Balance Sheet
Total Assets	302.84M	294.52M	276.40M	252.18M	207.60M	181.10M
Cash, Cash Equivalents and Short-Term Investments	43.97M	59.93M	49.42M	16.04M	6.48M	448.00K
Total Debt	92.03M	92.87M	71.00M	58.65M	36.52M	98.55M
Total Liabilities	141.25M	132.32M	113.71M	100.24M	75.57M	141.24M
Stockholders Equity	154.48M	155.57M	154.12M	141.68M	122.90M	32.40M
Cash Flow
Free Cash Flow	22.18M	43.91M	44.05M	14.73M	-3.70M	-21.93M
Operating Cash Flow	26.71M	47.98M	53.38M	29.47M	8.68M	14.55M
Investing Cash Flow	-2.23M	-5.86M	-30.17M	-17.84M	-13.28M	-37.35M
Financing Cash Flow	-39.36M	-33.62M	-16.17M	-2.07M	10.64M	22.45M

Karat Packaging Inc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.01
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KRT, the sentiment is Positive. The current price of 25.01 is above the 20-day moving average (MA) of 23.52, above the 50-day MA of 22.66, and above the 200-day MA of 24.91, indicating a bullish trend. The MACD of 0.62 indicates Negative momentum. The RSI at 70.92 is Negative, neither overbought nor oversold. The STOCH value of 90.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KRT.

Karat Packaging Inc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MYE	69 Neutral	$748.91M	26.89	9.92%	2.80%	0.26%	78.05%
TRS	69 Neutral	$1.42B	32.45	6.26%	0.45%	11.83%	67.28%
KRT	69 Neutral	$502.69M	16.68	19.43%	7.94%	8.93%	6.82%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
PACK	53 Neutral	$492.76M	-12.90	-6.68%	―	9.54%	-81.46%
YHGJ	45 Neutral	$10.71M	-11.75	-7.12%	―	4.41%	55.72%

Karat Packaging Inc Corporate Events

Karat Packaging Inc Announces Dividend and Share Buyback

On November 4, 2025, Karat Packaging Inc. announced a regular quarterly cash dividend of $0.45 per share, payable on November 28, 2025, to shareholders recorded by November 21, 2025. The company also initiated its first-ever share repurchase program, authorizing the buyback of up to $15 million of its common stock. This move reflects the board’s confidence in the company’s growth potential and financial strength, aiming to deliver long-term value to shareholders. The repurchase program, which has no expiration, will be conducted in compliance with securities laws and does not obligate the company to repurchase any specific amount.

The most recent analyst rating on (KRT) stock is a Buy with a $28.00 price target. To see the full list of analyst forecasts on Karat Packaging Inc stock, see the KRT Stock Forecast page.