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Karat Packaging Inc (KRT)
NASDAQ:KRT
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Karat Packaging Inc (KRT) AI Stock Analysis

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KRT

Karat Packaging Inc

(NASDAQ:KRT)

Rating:70Outperform
Price Target:
$28.00
▲(10.50% Upside)
Karat Packaging Inc's overall stock score is driven by strong financial performance and positive earnings call highlights. However, technical analysis indicates bearish momentum, which tempers the overall score. The reasonable valuation and attractive dividend yield provide additional support, while the recent dividend announcement adds a positive note.
Positive Factors
Operational efficiency
The new Chino warehouse is fully operational now and has helped Karat stock up for growth in the second half.
Volume growth
The strong 14% volume growth in Q4’24 and the anticipated double-digit volume growth in 2025 indicate it is not only growing but also actively taking market share.
Negative Factors
Pricing risk
The risk is that the price increases will not be enough to maintain margins and volumes could take a dive.
Tariff impact
Tariffs are expected to impact the third quarter significantly, as evidenced by the gross margin guide being in the low-to-mid-30% range due to higher-cost/tariff-impacted goods.

Karat Packaging Inc (KRT) vs. SPDR S&P 500 ETF (SPY)

Karat Packaging Inc Business Overview & Revenue Model

Company DescriptionKarat 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 MoneyKarat Packaging generates revenue through the sale of its diverse line of disposable packaging products to customers in the food service and retail industries. Key revenue streams include direct sales, distribution agreements, and long-term contracts with major food service companies and restaurants. Additionally, the company benefits from strategic partnerships with suppliers and logistics providers that enable efficient production and distribution. Factors contributing to its earnings include the increasing demand for takeout and delivery services, a growing emphasis on sustainability, and the expansion of its product offerings to include eco-friendly packaging solutions.

Karat Packaging Inc Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with record performance metrics, strategic supply chain diversification, and operational efficiency improvements. However, challenges such as foreign currency headwinds and tariff impacts on costs were noted, which are expected to affect the upcoming quarter's gross margin.
Q2-2025 Updates
Positive Updates
Record Second Quarter Performance
Achieved a record second quarter performance with a 13% increase in sales volume, 10% growth in net sales, and 20% growth in net income year-over-year.
Supply Chain Diversification
Reduced reliance on China to 10% and expanded sourcing across other Asian countries and Latin America to enhance supply chain resilience.
New Distribution Center
Opened a new distribution center near Chino headquarters, improving logistics capabilities and enabling faster delivery times.
Operational Efficiency Gains
Improved operating cost leverage, saving $1 million in online shipping and marketing by switching providers and shifting online sales focus to own e-commerce storefront.
Financial Health
Net income for the second quarter increased by 19.8% to $11.1 million, and adjusted EBITDA increased to $17.7 million from $15.7 million in the prior year quarter.
Negative Updates
Foreign Currency Headwind
Experienced a significant foreign currency headwind due to the weakening of the U.S. dollar against the New Taiwan dollar, resulting in a $2.9 million loss on foreign currency transactions.
Tariffs Impacting Costs
Higher ocean freight and duty costs rose by $2.1 million, impacted by recent tariffs and an increase in import volume of 37%.
Gross Margin Decline
Expected sequential decline in gross margin for the third quarter due to tariffs and currency exchange impacts.
Company Guidance
During the Karat Packaging Inc. Second Quarter 2025 Earnings Conference Call, the company provided guidance for the upcoming quarters, highlighting expected financial performance metrics. Net sales for the third quarter of 2025 are projected to increase by approximately 9% to 10% over the prior year quarter. The company anticipates gross margins for the third quarter to be in the low to mid-30s, with adjusted EBITDA margin expected to range from 10% to 12%. This guidance reflects the impact of elevated tariffs on the cost of goods sold. Despite challenges, Karat Packaging has emphasized a strategic focus on diversifying its sourcing strategy, reducing reliance on China to just 10% in the second quarter, and expanding into other Asian and Latin American countries. The company is also concentrating on accelerating top-line growth and profitability through product innovation, strategic expansion, and disciplined cost management, with operational efficiency efforts leading to $1 million in savings in online shipping and marketing costs.

Karat Packaging Inc Financial Statement Overview

Summary
Karat Packaging Inc exhibits excellent financial health, characterized by consistent revenue and margin growth, a sound balance sheet, and strong cash flow generation. Despite increased leverage, the company maintains a healthy capital structure and offers attractive returns to shareholders. Overall, Karat Packaging is well-positioned for future growth in the packaging sector.
Income Statement
85
Very Positive
Karat Packaging Inc has demonstrated strong revenue growth with Total Revenue rising from $364.24 million in 2021 to $430.64 million in TTM (Trailing-Twelve-Months) 2025, marking consistent growth over years. Gross Profit Margin remains robust at around 38.6% in TTM, supported by effective cost management. The Net Profit Margin has improved to 7% in TTM 2025, indicating a healthy operational efficiency. EBIT and EBITDA margins are stable, reinforcing the company's profitability and operational strength.
Balance Sheet
78
Positive
The Balance Sheet depicts a stable financial position with Stockholders' Equity rising to $153.31 million in TTM 2025. The Debt-to-Equity Ratio has increased, reflecting higher leverage, but remains manageable. Return on Equity stands at 19.7% in TTM, showcasing strong returns for shareholders. The Equity Ratio is moderate, indicating a balanced capital structure.
Cash Flow
82
Very Positive
Cash Flow analysis highlights robust Free Cash Flow growth, with a marked increase in Operating Cash Flow to $49.15 million in TTM 2025. The Free Cash Flow to Net Income Ratio is solid, denoting effective cash conversion. The company has maintained strong cash generation, supporting its investment and financing activities.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue442.03M422.63M405.65M422.96M364.24M295.52M
Gross Profit173.19M164.33M153.04M132.09M107.83M89.13M
EBITDA65.52M61.12M60.78M48.76M40.48M34.42M
Net Income32.05M29.98M32.47M23.65M20.78M17.52M
Balance Sheet
Total Assets320.96M294.52M276.40M252.18M207.60M181.10M
Cash, Cash Equivalents and Short-Term Investments30.55M59.93M49.42M16.04M6.48M448.00K
Total Debt51.43M92.87M71.00M58.65M36.52M98.55M
Total Liabilities158.26M132.32M113.71M100.24M75.57M141.24M
Stockholders Equity155.85M155.57M154.12M141.68M122.90M32.40M
Cash Flow
Free Cash Flow46.90M43.91M44.05M14.73M-3.70M-21.93M
Operating Cash Flow45.20M47.98M53.38M29.47M8.68M14.55M
Investing Cash Flow3.61M-5.86M-30.17M-17.84M-13.28M-37.35M
Financing Cash Flow-37.58M-33.62M-16.17M-2.07M10.64M22.45M

Karat Packaging Inc Technical Analysis

Technical Analysis Sentiment
Negative
Last Price25.34
Price Trends
50DMA
26.80
Negative
100DMA
27.06
Negative
200DMA
27.88
Negative
Market Momentum
MACD
-0.49
Negative
RSI
43.88
Neutral
STOCH
35.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KRT, the sentiment is Negative. The current price of 25.34 is below the 20-day moving average (MA) of 25.55, below the 50-day MA of 26.80, and below the 200-day MA of 27.88, indicating a bearish trend. The MACD of -0.49 indicates Negative momentum. The RSI at 43.88 is Neutral, neither overbought nor oversold. The STOCH value of 35.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KRT.

Karat Packaging Inc Risk Analysis

Karat Packaging Inc disclosed 56 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

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$1.57B42.505.36%0.41%6.72%-6.68%
70
Outperform
$511.36M15.8720.44%6.91%7.99%13.05%
64
Neutral
$628.48M63.683.43%3.21%1.11%-74.94%
61
Neutral
$17.78B13.97-5.49%3.03%1.50%-15.71%
58
Neutral
$2.19B-69.06%10.99%8.39%72.18%
54
Neutral
$469.89M-6.24%10.38%-123.75%
53
Neutral
$2.04B-18.69%-3.36%11.88%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KRT
Karat Packaging Inc
25.64
1.52
6.30%
MYE
Myers Industries
16.80
2.25
15.46%
OI
O-I Glass
13.03
0.24
1.88%
TRS
Trimas
38.77
13.58
53.91%
PACK
Ranpak Holdings
5.16
-1.92
-27.12%
AMBP
Ardagh Metal Packaging
3.64
0.56
18.18%

Karat Packaging Inc Corporate Events

Dividends
Karat Packaging Announces Quarterly Dividend Declaration
Positive
Aug 6, 2025

On August 5, 2025, Karat Packaging Inc. announced that its Board of Directors declared a regular quarterly cash dividend of $0.45 per share on its common stock. This dividend is set to be paid on or about August 27, 2025, to stockholders of record as of August 20, 2025, reflecting the company’s commitment to returning value to its shareholders.

The most recent analyst rating on (KRT) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Karat Packaging Inc stock, see the KRT Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Karat Packaging Inc Elects Directors at Annual Meeting
Neutral
Jun 20, 2025

At the 2025 Annual Meeting of Stockholders held on June 19, Karat Packaging Inc. elected five directors, including Alan Yu and Jian Guo, to serve until the next annual meeting. Additionally, stockholders ratified PricewaterhouseCoopers LLP as the company’s independent accountants for the fiscal year ending December 31, 2025, and approved the executive compensation plan.

The most recent analyst rating on (KRT) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Karat Packaging Inc stock, see the KRT Stock Forecast page.

Private Placements and FinancingBusiness Operations and StrategyRegulatory Filings and Compliance
Karat Packaging Inc Announces Secondary Stock Offering
Neutral
Jun 12, 2025

On June 10, 2025, Karat Packaging Inc. announced a secondary offering of 1,500,000 shares of its common stock by certain members of its management team, with BofA Securities and William Blair & Company acting as joint lead book-runners. The company will not offer any shares or receive proceeds from this sale, which is conducted under a shelf registration statement filed with the SEC. The offering includes a 30-day option for underwriters to purchase an additional 225,000 shares. This move is part of the company’s strategic financial operations, potentially impacting its market positioning and stakeholder interests.

The most recent analyst rating on (KRT) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Karat Packaging Inc stock, see the KRT Stock Forecast page.

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.Date of analysis: Aug 14, 2025