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Karat Packaging Inc
(NASDAQ:KRT)
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Rating:71Outperform
Price Target:
$44.00
▲(11.34% Upside)
Action:Reiterated
Date:07/25/26
KRT scores well on fundamentals (solid margins/ROE and improved leverage) and has positive guidance and execution signals from the latest earnings call. The score is held back by weaker recent operating cash flow conversion, a technically overbought setup despite a strong uptrend, and a valuation that is not especially cheap even with a strong dividend yield.
Positive Factors
Strong profitability & ROE
Consistent TTM margins and a high ROE indicate durable operating efficiency and pricing power in distribution/manufacturing. This earnings quality supports sustained reinvestment, dividends, and the ability to absorb cyclical cost swings while maintaining returns to shareholders over the medium term.
Negative Factors
Weak operating cash flow conversion
Operating cash conversion materially below historic levels means reported earnings are less supported by cash, increasing sensitivity to working-capital swings. Persistent weak conversion can constrain investment, dividend sustainability, and force reliance on financing during cost or demand shocks.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability & ROE
Consistent TTM margins and a high ROE indicate durable operating efficiency and pricing power in distribution/manufacturing. This earnings quality supports sustained reinvestment, dividends, and the ability to absorb cyclical cost swings while maintaining returns to shareholders over the medium term.
Read all positive factors
Karat Packaging Inc (KRT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$803.34M
Dividend Yield4.47%
Average Volume (3M)134.74K
Price to Earnings (P/E)25.3
Beta (1Y)0.91
Revenue Growth11.71%
EPS Growth5.13%
CountryUS
Employees696
SectorConsumer Cyclical
Sector Strength84
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.59
Shares Outstanding19,963,732
10 Day Avg. Volume126,931
30 Day Avg. Volume134,737
Financial Highlights & Ratios
PEG Ratio3.08
Price to Book (P/B)3.03
Price to Sales (P/S)0.97
P/FCF Ratio15.45
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$36.50Price Target Upside-7.64% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)1.8
Revenue Forecast (FY)$524.55M
Karat Packaging Inc Business Overview & Revenue Model
Company Description
Karat Packaging Inc. is a company dedicated to the manufacturing and distribution of various single-use consumables. These items, crafted from materials such as traditional plastics, paper, and environmentally friendly biopolymer-based or other co...
How the Company Makes Money
Karat Packaging makes money primarily by selling disposable foodservice packaging and restaurant supplies at a markup over its product and fulfillment costs. Key revenue streams include: (1) Product sales to foodservice businesses (e.g., restauran...
Karat Packaging Inc Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call presents a generally positive operational and top-line story: strong revenue growth (+12.9% YoY), accelerating online sales, improving supply diversification, and healthy cash generation and dividends. However, margin pressure from higher tariffs, elevated import costs, and commodity/oil price risk are notable headwinds that compressed gross and EBITDA margins. Management provided cautious but constructive guidance (Q2 sales +8%–10%, gross margin 35%–37%, full-year low-double-digit growth) and is executing pricing and sourcing actions to mitigate cost pressures. On balance, the company shows solid execution and growth momentum while addressing near-term cost challenges.Positive Updates
Double-Digit Revenue Growth
Net sales of $116.9M in Q1 2026, up 12.9% year-over-year (from $103.6M), with momentum building through the quarter and March growth exceeding 20%.
Negative Updates
Gross Margin Compression
Gross margin declined to 35.5% in Q1 2026 from 39.3% a year ago (down 3.8 percentage points), reflecting higher import costs, tariffs, and elevated inventory adjustments as a percent of sales.
Read all updates
Q1-2026 Updates
Positive
Negative
Double-Digit Revenue Growth
Net sales of $116.9M in Q1 2026, up 12.9% year-over-year (from $103.6M), with momentum building through the quarter and March growth exceeding 20%.
Read all positive updates
Company Guidance
Management guided Q2 2026 net sales growth of about 8%–10% year‑over‑year, with Q2 gross margin 35%–37% and adjusted EBITDA margin 11%–13% (excluding potential tariff refund); for full‑year 2026 they expect net sales to grow in the low double‑digit range, full‑year gross margin of 34%–36% and adjusted EBITDA margin of 11%–13% (ex‑refund). For context, Q1 sales were $116.9M (+12.9%), gross margin 35.5%, adjusted EBITDA $12.5M (10.7% margin), operating cash flow $7.2M and free cash flow $6.3M. Management noted a ~$2.0M pull‑forward from April into March, announced mid‑May price increases of roughly 5%–15% by category (peers ~8%–12%), expects tariff savings to begin reducing COGS this month (tariff pressure easing versus prior ~20% to ~10%), and reiterated a $0.45 quarterly dividend.Karat Packaging Inc Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 481.07M | 467.74M | 422.63M | 405.65M | 422.96M | 364.24M |
| Gross Profit | 171.73M | 172.14M | 164.33M | 153.04M | 132.09M | 107.83M |
| EBITDA | 62.16M | 66.19M | 61.12M | 60.78M | 48.76M | 40.48M |
| Net Income | 31.81M | 31.48M | 29.98M | 32.47M | 23.65M | 20.78M |
Balance Sheet | ||||||
| Total Assets | 282.68M | 287.69M | 294.52M | 276.40M | 252.18M | 207.60M |
| Cash, Cash Equivalents and Short-Term Investments | 34.42M | 37.88M | 59.93M | 49.42M | 16.04M | 6.48M |
| Total Debt | 76.55M | 79.86M | 92.87M | 71.00M | 58.65M | 36.52M |
| Total Liabilities | 127.51M | 130.82M | 132.32M | 113.71M | 100.24M | 75.57M |
| Stockholders Equity | 147.45M | 149.42M | 155.57M | 154.12M | 141.68M | 122.90M |
Cash Flow | ||||||
| Free Cash Flow | 28.62M | 29.31M | 43.91M | 44.05M | 14.73M | -3.70M |
| Operating Cash Flow | 33.28M | 33.81M | 47.98M | 53.38M | 29.47M | 8.68M |
| Investing Cash Flow | 14.81M | 24.14M | -5.86M | -30.17M | -17.84M | -13.28M |
| Financing Cash Flow | -51.89M | -51.66M | -33.62M | -16.17M | -2.07M | 10.64M |
Karat Packaging Inc Technical Analysis
Positive
39.52
Price Trends
32.62
Positive
30.07
Positive
26.49
Positive
Market Momentum
2.28
Negative
84.71
Negative
95.12
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 39.52 is above the 20-day moving average (MA) of 37.50, above the 50-day MA of 32.62, and above the 200-day MA of 26.49, indicating a bullish trend. The MACD of 2.28 indicates Negative momentum. The RSI at 84.71 is Negative, neither overbought nor oversold. The STOCH value of 95.12 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KRT.
Karat Packaging Inc Risk Analysis
Karat Packaging Inc disclosed 55 risk factors in its most recent earnings report. Karat Packaging Inc 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
Karat Packaging Inc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $803.34M | 25.31 | 20.96% | 4.55% | 11.71% | 5.13% | |
69 Neutral | $1.29B | 34.86 | 17.33% | 1.72% | -8.73% | 268.62% | |
69 Neutral | $1.43B | 1.56 | 82.44% | 0.40% | -21.18% | 2519.53% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
45 Neutral | $439.08M | -11.64 | -7.04% | ― | 9.77% | -8.65% | |
42 Neutral | $7.54M | -2.90 | -25.37% | ― | 17.89% | -58.26% |
* Consumer Cyclical Sector Average
KRT
Karat Packaging Inc
40.24
15.67
63.75%
YHGJ
Yunhong Green CTI
2.89
-4.04
-58.33%
DSS
DSS
0.54
-0.51
-48.95%
MYE
Myers Industries
34.16
18.81
122.60%
TRS
Trimas
39.93
5.04
14.46%
PACK
Ranpak Holdings
5.12
1.58
44.63%
Karat Packaging Inc Corporate Events
Executive/Board ChangesShareholder Meetings
Karat Packaging Stockholders Back Directors and Governance Proposals
Positive
Jun 17, 2026
At its annual meeting of stockholders held on June 16, 2026, Karat Packaging Inc. elected five directors—Alan Yu, Jian Guo, Paul Y. Chen, Eric Chen, and Eve Yen—to serve until the next annual meeting or until their successors are elect...
Dividends
Karat Packaging Declares Regular Quarterly Cash Dividend
Positive
May 6, 2026
On May 5, 2026, Karat Packaging Inc.’s board of directors declared a regular quarterly cash dividend of $0.45 per share on its common stock. The dividend will be paid on or about May 28, 2026 to shareholders of record as of the close of busi...
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.