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Karat Packaging Inc
(NASDAQ:KRT)
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Rating:77Outperform
Price Target:
$53.00
▲(34.11% Upside)
Action:Reiterated
Date:08/09/26
The score is primarily driven by strong financial performance—delevered balance sheet (zero debt), improved profitability, and stronger free cash flow. This is tempered by stretched technical conditions (overbought momentum) and a valuation that is only partly offset by a high dividend yield. Earnings-call details also reduce the score due to the reliance on a one-time tariff refund and guidance implying a near-term margin step-down.
Positive Factors
Debt-free balance sheet & strong ROE
A zero-debt balance sheet with ROE near 32% provides durable financial flexibility: capacity to fund growth, maintain dividends and buybacks, and withstand industry cyclicality without refinancing risk. Long-term value depends on sustaining operational returns absent leverage.
Negative Factors
One-time IEEPA tariff refund boosted results
A large nonrecurring tariff refund materially inflated recent margins and earnings, reducing the persistence of headline profitability. Investors must see consistent margins and cash flow after refunds to confirm structural improvement rather than temporary accounting benefits.
Read all positive and negative factors
Positive Factors
Negative Factors
Debt-free balance sheet & strong ROE
A zero-debt balance sheet with ROE near 32% provides durable financial flexibility: capacity to fund growth, maintain dividends and buybacks, and withstand industry cyclicality without refinancing risk. Long-term value depends on sustaining operational returns absent leverage.
Read all positive factors
Karat Packaging Inc (KRT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$958.92M
Dividend Yield3.6%
Average Volume (3M)134.74K
Price to Earnings (P/E)19.9
Beta (1Y)0.98
Revenue Growth11.62%
EPS Growth57.06%
CountryUS
Employees666
SectorConsumer Cyclical
Sector Strength84
IndustryPackaging & Containers
Share Statistics
EPS (TTM)2.51
Shares Outstanding19,931,720
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
$42.00Price Target Upside6.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)1.8
Revenue Forecast (FY)$524.16M
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:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 05, 2026
Earnings Call Sentiment Neutral
The call presented a mix of solid operational momentum—record sales, strong online growth, expanded customer wins, distribution center investment, sourcing diversification and improved reported profitability—largely amplified by a significant one-time IEEPA tariff refund. Underlying metrics (gross margin excluding refund, rising product/import and shipping costs, retail channel decline and higher operating expenses) temper the headline results. Management provided conservative near-term margin guidance reflecting minimal expected refunds and highlighted actions to control shipping and SG&A costs.Positive Updates
Record Quarterly Net Sales
Net sales of $136.3 million in Q2 2026, up 9.9% year over year from $124.0 million, driven by volume, product mix and pricing.
Negative Updates
Heavy Dependence on One-Time IEEPA Tariff Refunds
A $25.8 million IEEPA tariff refund materially drove Q2 results (added ~1,890 bps to gross margin and ~$1.00 to diluted EPS). Management expects insignificant IEEPA refunds in Q3, meaning reported margins are not fully repeatable.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Quarterly Net Sales
Net sales of $136.3 million in Q2 2026, up 9.9% year over year from $124.0 million, driven by volume, product mix and pricing.
Read all positive updates
Company Guidance
Management updated 3Q26 guidance calling for net sales to grow in the low double‑digit range year‑over‑year, gross margin of 35.0%–37.0% and adjusted EBITDA margin of 9.0%–11.0% (both including only insignificant IEEPA tariff refunds expected in the quarter); for full‑year 2026 they expect net sales to grow in the low double‑digit range, full‑year gross margin in the low‑40% range and adjusted EBITDA margin of approximately the mid‑teens (reflecting IEEPA refunds recorded in H1); management also reiterated online sales are on track for roughly $100 million this year and emphasized continued cost‑management to drive operating leverage.Karat Packaging Inc Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
88
Very Positive
Cash Flow
79
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 493.38M | 467.74M | 422.63M | 405.65M | 422.96M | 364.24M |
| Gross Profit | 199.79M | 172.14M | 164.33M | 153.04M | 132.09M | 107.83M |
| EBITDA | 81.26M | 66.19M | 61.12M | 60.78M | 48.76M | 40.48M |
| Net Income | 50.21M | 31.48M | 29.98M | 32.47M | 23.65M | 20.78M |
Balance Sheet | ||||||
| Total Assets | 316.81M | 287.69M | 294.52M | 276.40M | 252.18M | 207.60M |
| Cash, Cash Equivalents and Short-Term Investments | 54.14M | 37.88M | 59.93M | 49.42M | 16.04M | 6.48M |
| Total Debt | 72.72M | 79.86M | 92.87M | 71.00M | 58.65M | 36.52M |
| Total Liabilities | 142.54M | 130.82M | 132.32M | 113.71M | 100.24M | 75.57M |
| Stockholders Equity | 166.47M | 149.42M | 155.57M | 154.12M | 141.68M | 122.90M |
Cash Flow | ||||||
| Free Cash Flow | 53.09M | 29.31M | 43.91M | 44.05M | 14.73M | -3.70M |
| Operating Cash Flow | 56.68M | 33.81M | 47.98M | 53.38M | 29.47M | 8.68M |
| Investing Cash Flow | 5.93M | 24.14M | -5.86M | -30.17M | -17.84M | -13.28M |
| Financing Cash Flow | -54.77M | -51.66M | -33.62M | -16.17M | -2.07M | 10.64M |
Karat Packaging Inc Technical Analysis
Positive
39.52
Price Trends
35.08
Positive
31.44
Positive
27.22
Positive
Market Momentum
3.41
Negative
90.80
Negative
84.24
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 below the 20-day moving average (MA) of 41.06, above the 50-day MA of 35.08, and above the 200-day MA of 27.22, indicating a bullish trend. The MACD of 3.41 indicates Negative momentum. The RSI at 90.80 is Negative, neither overbought nor oversold. The STOCH value of 84.24 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | $958.92M | 19.94 | 32.10% | 4.55% | 11.62% | 57.06% | |
69 Neutral | $1.25B | 23.22 | 17.77% | 1.72% | -8.73% | 268.62% | |
69 Neutral | $1.43B | 1.65 | 83.76% | 0.40% | -21.18% | 2519.53% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
45 Neutral | $445.94M | -12.23 | -7.18% | ― | 9.77% | -8.65% | |
42 Neutral | $9.05M | -2.97 | -25.37% | ― | 2.83% | -130.52% |
* Consumer Cyclical Sector Average
KRT
Karat Packaging Inc
48.26
24.22
100.79%
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TRS
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0.94
21.03%
Karat Packaging Inc Corporate Events
Business Operations and StrategyDividends
Karat Packaging Raises Quarterly Dividend, Signals Confidence
Positive
Aug 5, 2026
On August 4, 2026, Karat Packaging Inc.’s board of directors approved an increase in the company’s regular quarterly cash dividend to $0.47 per share on its common stock, representing a 4.4 percent or $0.02 per share raise over the pri...
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...
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.