Karat Packaging Inc (KRT) AI Stock Analysis

• Market Cap: $555.39M
• Dividend Yield: 7.94%
• Average Volume (3M): 66.44K
• Price to Earnings (P/E): 14.4
• Beta (1Y): 1.11
• Revenue Growth: 8.93%
• EPS Growth: 6.82%
• Country: US
• Employees: 683
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Packaging & Containers
• EPS (TTM): 0.34
• Shares Outstanding: 20,099,504
• 10 Day Avg. Volume: 77,278
• 30 Day Avg. Volume: 66,440
• PEG Ratio: 3.08
• Price to Book (P/B): 3.03
• Price to Sales (P/S): 0.97
• P/FCF Ratio: 15.45
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 1.24
• Enterprise Value/Gross Profit: 3.37
• Enterprise Value/Ebitda: 9.32
• 1Y Price Target: $28.50
• Price Target Upside: 2.44% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3
• EPS Forecast (FY): 1.71
• Revenue Forecast (FY): $523.35M

• Rating: 73 Outperform
• Price Target: $30.00 ▲(7.84% Upside)
• Action: Reiterated Date: 03/14/26
• Date: Action: Reiterated 03/14/26

The score is driven primarily by strong financial positioning (debt-free balance sheet, growing equity, solid profitability) and attractive valuation (moderate P/E and high dividend yield). Offsetting factors are weak near-term technical momentum (oversold/negative MACD) and earnings-call risks from tariff- and import-cost pressure, even though management’s 2026 growth and margin-improvement guidance is supportive.

Positive Factors

Debt-free Balance Sheet

Elimination of debt and a materially larger equity base materially lowers financial risk and increases strategic optionality. Over the next 2–6 months this supports sustained dividends, buybacks, investments in SKU expansion or sourcing diversity, and resilience to macro shocks.

Sustained Revenue Growth

Meaningful multi-year top-line expansion reflects durable demand, scale advantages, and product breadth. Growing revenue supports operating leverage potential, justifies reinvestment in eco-friendly SKUs, and increases potential to sustain margins and shareholder returns over time.

Cash Generation & Capital Returns

Consistent positive FCF and active capital returns indicate strong cash conversion and disciplined capital allocation. This durable cash generation capacity funds dividends, buybacks and debt reduction, enhancing shareholder returns and signalling management commitment to long-term value.

Negative Factors

Tariff-driven Margin Pressure

Structural increases in duties and import-related costs compress gross margins and may persist absent permanent sourcing or pricing shifts. Sustained tariff exposure reduces reinvestment capacity and pressures long-run profitability unless mitigated by supply diversification or higher effective pricing.

Volatile Cash Flow

Intermittent swings in operating cash flow and working capital reduce predictability of free cash flow and complicate funding for capex, dividends, or buybacks. Over several months this increases sensitivity to seasonal or weather disruptions and constrains strategic flexibility.

Inconsistent Operating Profitability

Fluctuating operating margins undermine visibility into sustainable earnings power and hint at structural cost or pricing pressures. Without consistent operating margin recovery, long-term ROI on investments and returns to shareholders may be less reliable despite topline growth.

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 makes money primarily by selling disposable foodservice packaging and related supplies to foodservice customers through multiple distribution channels. Its core revenue stream is product sales (e.g., cups, lids, food containers, utensils, straws, and bags), where earnings are generated from the spread between its sourcing/manufacturing costs and the prices charged to customers, supported by scale in purchasing, logistics, and product breadth. The company also generates revenue through its distribution capabilities—selling across different channels such as direct-to-business customers and e-commerce—by capturing order volume, repeat purchasing, and cross-selling across its product catalog. Additional contribution to earnings can come from proprietary or differentiated product offerings (including sustainability-focused products) that can support customer retention and pricing power. Specific partnership arrangements: null.

Karat Packaging Inc Financial Statement Overview

Summary

Overall fundamentals are solid: meaningful multi-year revenue growth and healthy net margins, plus a materially de-risked balance sheet with debt eliminated and steadily rising equity. The main constraint is consistency—cash flow has been volatile and operating profitability showed softness (including an unusually low reported operating margin in 2025), which tempers the score despite improved financial strength.

Income Statement

Revenue has grown meaningfully over the long run (from ~$296M in 2020 to ~$468M in 2025), with 2025 showing strong growth versus 2024. Profitability is solid for the industry: gross margin improved versus earlier years and remains healthy, and net margin has generally held in the mid-to-high single digits. Offsetting this, profitability softened from 2023 to 2024 before re-accelerating, and 2025 shows weaker operating profitability versus recent years (including an unusually low reported operating margin), which raises some quality/consistency questions.

Balance Sheet

Balance sheet strength improved sharply: total debt fell from elevated levels earlier in the period to zero in 2025, materially reducing financial risk. Equity has steadily built (from ~$32M in 2020 to ~$157M in 2025), supporting a stronger capital base. Returns on equity are consistently attractive (~17%–21% in most years), indicating good profitability on shareholder capital. The main watch item is that total assets were slightly lower in 2025 than 2024, suggesting some contraction in the asset base even as earnings remained solid.

Cash Flow

Cash generation is positive overall, with operating cash flow and free cash flow turning strongly positive after negative free cash flow in 2020–2021. 2025 free cash flow shows a large rebound and matches net income, which is a good quality signal. However, cash flow has been volatile: operating cash flow dropped in 2025 versus 2024, and the company’s cash flow has not consistently exceeded earnings across the full period, indicating working-capital and/or reinvestment swings that can pressure near-term liquidity.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	467.74M	422.63M	405.65M	422.96M	364.24M
Gross Profit	172.14M	164.33M	153.04M	132.09M	107.83M
EBITDA	62.25M	61.12M	60.78M	48.76M	40.48M
Net Income	31.48M	29.98M	32.47M	23.65M	20.78M
Balance Sheet
Total Assets	287.69M	294.52M	276.40M	252.18M	207.60M
Cash, Cash Equivalents and Short-Term Investments	37.88M	59.93M	49.42M	16.04M	6.48M
Total Debt	57.00M	92.87M	71.00M	58.65M	36.52M
Total Liabilities	130.82M	132.32M	113.71M	100.24M	75.57M
Stockholders Equity	149.42M	155.57M	154.12M	141.68M	122.90M
Cash Flow
Free Cash Flow	29.31M	43.91M	44.05M	14.73M	-3.70M
Operating Cash Flow	33.81M	47.98M	53.38M	29.47M	8.68M
Investing Cash Flow	24.14M	-5.86M	-30.17M	-17.84M	-13.28M
Financing Cash Flow	-51.66M	-33.62M	-16.17M	-2.07M	10.64M

Karat Packaging Inc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 27.82
• 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 27.82 is above the 20-day moving average (MA) of 24.56, above the 50-day MA of 24.47, and above the 200-day MA of 24.27, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 71.12 is Negative, neither overbought nor oversold. The STOCH value of 97.38 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
KRT	73 Outperform	$555.39M	14.38	20.54%	7.94%	8.93%	6.82%
MYE	64 Neutral	$778.36M	20.03	12.22%	2.80%	0.26%	78.05%
TRS	62 Neutral	$1.34B	11.92	0.07%	0.45%	11.83%	67.28%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
PACK	46 Neutral	$292.29M	-11.89	-7.11%	―	9.54%	-81.46%
YHGJ	43 Neutral	$7.96M	-3.80	-6.77%	―	4.41%	55.72%

Karat Packaging Inc Corporate Events

Karat Packaging Declares Regular Quarterly Cash Dividend

On February 5, 2026, Karat Packaging Inc.’s board of directors declared a regular quarterly cash dividend of $0.45 per share on its common stock, reinforcing the company’s practice of returning capital to shareholders. The dividend, announced publicly on February 6, 2026, is scheduled to be paid on or about February 27, 2026 to stockholders of record as of the close of business on February 20, 2026, signaling ongoing confidence in the company’s financial position and cash-generation capacity.

The most recent analyst rating on (KRT) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Karat Packaging Inc stock, see the KRT Stock Forecast page.