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Karooooo
(NASDAQ:KARO)
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Rating:72Outperform
Price Target:
$70.00
▲(8.90% Upside)
Action:Reiterated
Date:10/21/26
The score is driven primarily by strong profitability and a very upbeat earnings-call outlook (accelerating subscription growth, record operating profit, and expected second-half cash flow improvement). The main constraints are weak recent cash conversion/free cash flow and higher leverage than in prior years, while technicals are mixed and valuation is somewhat elevated (P/E ~29.7) despite a moderate dividend yield (~2.39%).
Positive Factors
Recurring subscription growth
Accelerating subscription revenue and a growing connected-vehicle base strengthen the recurring revenue foundation. This model can compound as more customers and vehicles join the platform, while broader adoption increases the value of Cartrack’s data, software tools, and installed ecosystem over time.
Negative Factors
Weak recent free cash flow
Weak recent free cash flow reduces the amount of internally generated capital available for expansion, dividends, or debt reduction, even though the company remains profitable. If cash conversion stays below earnings for several quarters, financial flexibility and confidence in earnings quality could weaken.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription growth
Accelerating subscription revenue and a growing connected-vehicle base strengthen the recurring revenue foundation. This model can compound as more customers and vehicles join the platform, while broader adoption increases the value of Cartrack’s data, software tools, and installed ecosystem over time.
Read all positive factors
Karooooo Key Performance Indicators (KPIs)
Any
Operating Income by Segment
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Data provided by:
The Fly
The FlyKarooooo (KARO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.00B
Dividend Yield2.32%
Average Volume (3M)79.42K
Price to Earnings (P/E)31.2
Beta (1Y)1.20
Revenue Growth31.78%
EPS Growth16.47%
CountryUS
Employees7,395
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)34.56
Shares Outstanding30,893,300
10 Day Avg. Volume80,169
30 Day Avg. Volume79,415
Financial Highlights & Ratios
PEG Ratio2.95
Price to Book (P/B)7.01
Price to Sales (P/S)4.24
P/FCF Ratio0.00
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue0.35
Enterprise Value/Gross Profit0.51
Enterprise Value/Ebitda0.84
Forecast
1Y Price Target
$74.67Price Target Upside16.16% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)39.5
Revenue Forecast (FY)$6.64B
Karooooo Business Overview & Revenue Model
Company Description
Karooooo Ltd. delivers a comprehensive software-as-a-service (SaaS) platform tailored for connected vehicles, extending its services across South Africa, the broader African continent, Europe, the Asia-Pacific region, the Middle East, and the Unit...
How the Company Makes Money
Karooooo primarily makes money by selling subscription-based fleet management and telematics services (mainly via Cartrack). Customers typically pay recurring monthly fees per vehicle/asset for access to the company’s software platform and service...
Karooooo Earnings Call Summary
Earnings Call Date:Oct 19, 2026
(Q2-2027)
| % Change Since: |
Next Earnings Date:Jan 21, 2027
Earnings Call Sentiment Positive
The call was strongly positive, characterized by accelerating subscription and constant currency growth, record subscriber additions, record operating profit, healthy retention and unit economics, strong demand for video and Cartrack Tag, and a reiterated FY 2027 outlook. The main challenges were foreign exchange headwinds, low quarterly free cash flow due to substantial growth investments, lower margins in Karooooo Logistics, moderated earnings growth from tax and finance expense, and currency-related weakness in reported regional growth.Positive Updates
Accelerating Subscription Revenue Growth
Cartrack subscription revenue growth accelerated to 20% in Q2 from 19% in Q1 despite foreign exchange headwinds. Constant currency subscription revenue growth increased to 23% from 21% in Q1, with acceleration across all regions.
Negative Updates
Foreign Exchange Headwinds
Reported growth was negatively affected by a strengthening South African rand. Cartrack subscription revenue grew 20% despite foreign exchange headwinds, compared with 23% growth in constant currency, while reported ARR growth of 19% compared with 22% in constant currency also reflected the currency impact.
Read all updates
Q2-2027 Updates
Positive
Negative
Accelerating Subscription Revenue Growth
Cartrack subscription revenue growth accelerated to 20% in Q2 from 19% in Q1 despite foreign exchange headwinds. Constant currency subscription revenue growth increased to 23% from 21% in Q1, with acceleration across all regions.
Read all positive updates
Company Guidance
Management reiterated its FY 2027 outlook, which implies accelerating constant currency subscription revenue growth at the midpoint and healthy earnings per share growth; it expects to benefit in the second half from continued revenue momentum, continued sales and marketing efficiencies, and a moderately lower tax rate, and expects more robust free cash flow generation in the second half of the year, with cash flow to strengthen over the coming quarters. Management believes it is on track to accelerate Cartrack subscription revenue growth in FY 2027 and that a similar momentum should continue for the remainder of FY 2027, while expecting Cartrack Tag and video adoption to exceed its budget for the financial year.Karooooo Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
73
Positive
Cash Flow
55
Neutral
| Breakdown | TTM | Feb 2026 | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.08B | 5.48B | 4.57B | 4.21B | 3.51B | 2.75B |
| Gross Profit | 4.09B | 3.72B | 3.20B | 2.69B | 2.27B | 1.82B |
| EBITDA | 2.50B | 2.24B | 2.06B | 1.79B | 1.51B | 1.26B |
| Net Income | 1.07B | 993.92M | 921.03M | 738.19M | 597.15M | 449.95M |
Balance Sheet | ||||||
| Total Assets | 6.28B | 5.85B | 5.10B | 4.27B | 3.72B | 3.04B |
| Cash, Cash Equivalents and Short-Term Investments | 650.21M | 1.16B | 1.05B | 456.03M | 957.38M | 719.21M |
| Total Debt | 1.43B | 1.15B | 727.53M | 263.86M | 179.14M | 211.46M |
| Total Liabilities | 3.16B | 2.49B | 1.84B | 1.29B | 1.05B | 899.74M |
| Stockholders Equity | 3.08B | 3.31B | 3.21B | 2.94B | 2.64B | 2.11B |
Cash Flow | ||||||
| Free Cash Flow | 59.66M | 0.00 | 928.88M | 80.15M | 595.43M | 387.59M |
| Operating Cash Flow | 2.14B | 1.81B | 1.97B | 972.78M | 1.23B | 952.64M |
| Investing Cash Flow | -1.65B | -1.11B | -1.10B | -949.50M | -677.29M | -740.88M |
| Financing Cash Flow | -569.56M | -649.35M | -452.00M | -603.97M | -457.21M | -442.92M |
Karooooo Technical Analysis
Positive
64.28
Price Trends
63.44
Positive
59.62
Positive
53.39
Positive
Market Momentum
0.12
Negative
58.42
Neutral
86.97
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Positive. The current price of 64.28 is above the 20-day moving average (MA) of 61.61, above the 50-day MA of 63.44, and above the 200-day MA of 53.39, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 58.42 is Neutral, neither overbought nor oversold. The STOCH value of 86.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KARO.
Karooooo Risk Analysis
Karooooo disclosed 69 risk factors in its most recent earnings report. Karooooo 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
Karooooo Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.00B | 31.15 | 32.53% | 2.32% | 31.78% | 16.47% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $167.78M | -3.93 | 58.01% | 6.49% | 110.30% | 57.62% | |
56 Neutral | $376.32M | -22.93 | -9.84% | ― | 25.84% | 42.54% | |
52 Neutral | $2.90B | -29.88 | -16.13% | ― | 29.13% | -25.19% | |
46 Neutral | $1.38B | -6.25 | -21.63% | ― | 108.63% | 40.63% | |
43 Neutral | $96.24M | -3.15 | 96.78% | ― | 30.54% | 14.01% |
* Technology Sector Average
KARO
Karooooo
64.73
20.00
44.70%
CRNC
Cerence
8.32
-3.07
-26.95%
MRT
Marti Technologies
1.95
-0.45
-18.75%
RDZN
Roadzen Inc
1.13
-0.27
-19.29%
WRD
WeRide
4.18
-6.98
-62.54%
VIA
Via Transportation, Inc. Class A
35.56
-16.29
-31.42%
Karooooo Corporate Events
Karooooo Posts Record Operating Profit as Subscription and Logistics Revenues Surge in Q2 FY2027
Oct 19, 2026
Karooooo reported strong unaudited second-quarter and half-year 2027 results for the period ended August 31, 2026, highlighted by acceleration in Cartrack’s subscription revenue growth to 20% year-on-year in rand and 23% in constant currency...
Karooooo Schedules Release of Q2 2027 Results and Investor Webinar for October 2026
Oct 5, 2026
Karooooo Limited, a Singapore-based operational intelligence and connected fleet solutions provider that fully owns Cartrack and holds a majority stake in Karooooo Logistics, continues to expand its cloud-based platform across more than 20 countri...
Karooooo Shareholders Approve All Resolutions at July 28, 2026 AGM
Jul 28, 2026
Karooooo Limited held its Annual General Meeting of Shareholders in Singapore on July 28, 2026, with a quorum present representing its 30,893,300 ordinary shares in issue. Shareholders considered both routine and special business, including board ...
Karooooo Clarifies AGM Record Date and Confirms Meeting Arrangements
Jul 23, 2026
Karooooo Ltd. confirmed on July 23, 2026, that its annual general meeting (AGM) arrangements remain as previously announced, with June 15, 2026 set as both the record date for distribution of the AGM notice and for shareholders’ eligibility ...
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.