Karat Packaging Inc (KRT) AI Stock Analysis

• Market Cap: $446.41M
• Dividend Yield: 8.02%
• Average Volume (3M): 136.09K
• Price to Earnings (P/E): 14.8
• Beta (1Y): 1.25
• 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: 172,780
• 30 Day Avg. Volume: 136,089
• 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: 1.26
• Enterprise Value/Revenue: 1.24
• Enterprise Value/Gross Profit: 3.27
• Enterprise Value/Ebitda: 8.86
• 1Y Price Target: $35.00
• Price Target Upside: 55.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: $24.00 ▲(6.67% Upside)

Karat Packaging Inc's overall stock score reflects a mix of strengths and challenges. The company's strong valuation and high dividend yield are significant positives, providing a solid income stream for investors. However, financial performance is tempered by profitability and cash flow concerns, and technical indicators suggest a bearish trend. The earnings call provided a balanced outlook with strategic growth initiatives, but also highlighted current financial pressures.

Positive Factors

Revenue Growth

The consistent revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.

Strategic Expansion

The expansion into the paper bag business diversifies revenue streams and positions the company for significant future growth.

Supply Chain Management

Improved supply chain management enhances resilience against global disruptions, ensuring consistent product availability.

Negative Factors

Decreased Margins

Falling gross margins due to higher import costs could pressure profitability, affecting long-term financial health if not addressed.

Decline in Operating Income

A decline in operating income suggests potential inefficiencies or cost pressures, which may hinder future profitability.

Retail Channel Weakness

Weakness in the retail channel could indicate broader market challenges, impacting revenue and growth prospects in this segment.

Karat Packaging Inc Business Overview & Revenue Model

Company Description

Karat Packaging Inc (KRT) is a leading provider of disposable foodservice packaging solutions headquartered in the United States. The company specializes in manufacturing and distributing a wide range of products, including paper and plastic food containers, cups, plates, cutlery, and straws. Serving various sectors such as restaurants, catering services, and retail, Karat Packaging aims to meet the growing demand for sustainable and eco-friendly packaging options while maintaining quality and affordability.

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 stable revenue growth and a strong gross profit margin, but faces challenges in profitability and cash flow generation. The balance sheet remains robust with moderate leverage, yet the decline in return on equity and free cash flow growth highlights areas for improvement. Overall, the company is in a stable financial position but should focus on enhancing profitability and cash flow efficiency.

Income Statement

Karat Packaging Inc shows a stable revenue growth with a TTM increase of 2.66%. The gross profit margin is healthy at 38.04%, indicating efficient cost management. However, the net profit margin has decreased to 1.12%, reflecting challenges in converting revenue into profit. The EBIT and EBITDA margins have also declined, suggesting increased operational costs or reduced pricing power.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.43, indicating a balanced approach to leveraging. Return on equity has decreased to 3.25%, showing reduced profitability from shareholders' investments. The equity ratio stands at 53.37%, suggesting a solid equity base relative to total assets.

Cash Flow

Free cash flow has significantly decreased by 44.67%, raising concerns about cash generation capabilities. The operating cash flow to net income ratio is 0.34, indicating that operating cash flow is not fully covering net income. However, the free cash flow to net income ratio is close to 1, suggesting that the company is still generating cash relative to its net income.

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: Neutral
• Last Price: 22.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KRT, the sentiment is Neutral. The current price of 22.5 is above the 20-day moving average (MA) of 21.86, below the 50-day MA of 23.07, and below the 200-day MA of 25.61, indicating a neutral trend. The MACD of -0.43 indicates Negative momentum. The RSI at 47.54 is Neutral, neither overbought nor oversold. The STOCH value of 76.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KRT.

Karat Packaging Inc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MYE	70 Outperform	$657.26M	23.60	9.92%	2.97%	0.26%	78.05%
KRT	69 Neutral	$446.41M	14.81	19.43%	8.02%	8.93%	6.82%
TRS	68 Neutral	$1.39B	31.91	6.26%	0.47%	11.83%	67.28%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
PACK	53 Neutral	$445.50M	-12.04	-6.68%	―	9.54%	-81.46%
YHGJ	45 Neutral	$13.59M	-9.96	-7.12%	―	4.41%	55.72%

Karat Packaging Inc Corporate Events

Karat Packaging Reports Record Sales Amid Cost Challenges

Karat Packaging Inc. is a specialty distributor and manufacturer of eco-friendly disposable foodservice products, serving national and regional restaurants across the United States. In its third quarter of 2025, Karat Packaging reported record net sales of $124.5 million, marking a 10.4% increase from the previous year. Despite this growth, the company faced challenges with decreased gross profit and net income due to rising import costs and tariffs. Key financial metrics showed a gross profit of $42.9 million and a net income of $7.6 million, both reflecting declines from the prior year. The company also highlighted strategic efforts to diversify sourcing and expand its product offerings, notably securing a significant new business for supplying paper bags. Looking ahead, Karat Packaging anticipates continued sales growth and is focused on enhancing supply chain resilience and operational efficiency to maintain its competitive edge.

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.

Karat Packaging’s Strong Q2 Performance Amid Challenges

Karat Packaging, Inc. recently held its second-quarter earnings call, revealing a generally positive sentiment despite some challenges. The company reported significant growth in sales, income, and operational efficiency, driven by strategic diversification and new business acquisitions. However, they also acknowledged hurdles such as unfavorable pricing, increased freight costs, and currency losses, with an anticipated decline in gross margin next quarter.

Karat Packaging Reports Record Second Quarter Results

Karat Packaging Inc. is a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products, serving national and regional restaurants across the United States. The company is known for its eco-friendly Karat Earth® line and offers customized solutions including new product development and logistics services.