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Karat Packaging Inc (KRT)
NASDAQ:KRT
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Karat Packaging Inc
(NASDAQ:KRT)
72Outperform
Positive Factors
Growth Opportunities
Karat's strong cash flow and proactive expansion of distribution capabilities are allowing it to capitalize on growth opportunities despite broader macro uncertainty.
Market Positioning
Karat Packaging is well-positioned to gain momentum building on a solid finish to 2024.
Supply Chain Resilience
The company’s ability to flexibly source products from various countries makes the company resilient to potential tariff uncertainties and supply chain disruptions.
Negative Factors
Earnings Performance
Fourth-quarter EPS missed expectations despite sales and gross margin that were in line, due to higher SG&A.
Tariff Impact
Any blanket tariff, or tariff on one of these countries, could put pressure on margins.
Karat Packaging Inc (KRT) vs. S&P 500 (SPY)
Market Cap
$499.71M
Dividend Yield6.35%
Average Volume (3M)38.61K
Price to Earnings (P/E)16.7
Beta (1Y)1.26
Revenue Growth4.19%
EPS Growth-8.17%
CountryUS
Employees683
SectorConsumer Cyclical
Sector Strength58
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.49
Shares Outstanding20,036,505
10 Day Avg. Volume48,922
30 Day Avg. Volume38,609
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.35
Price to Cash Flow (P/CF)17.30
P/FCF Ratio17.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$33.00Price Target Upside33.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
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 Inc. makes money through the sale of its disposable foodservice products to a diverse customer base, including restaurants, cafes, and retail outlets. The company generates revenue by manufacturing and distributing a broad array of packaging solutions, leveraging its extensive distribution network. Key revenue streams include direct sales to businesses and partnerships with distributors who supply Karat's products to end-users. Additionally, the company may benefit from strategic partnerships or collaborations that enhance its product offerings or expand its market reach. Karat Packaging's focus on environmentally friendly and innovative solutions also positions it to capitalize on the growing demand for sustainable packaging options in the foodservice industry.
Karat Packaging Inc Financial Statement Overview
Summary
Karat Packaging Inc shows strong financial performance with consistent revenue growth and improved profitability margins. The reduction in debt levels and enhancement in cash flows strengthen its financial position. However, fluctuations in EBIT margins and missing liability data for 2024 pose potential risks.Income Statement
Karat Packaging Inc has shown consistent revenue growth over the years, with a revenue increase from $224.91 million in 2019 to $422.63 million in 2024. The Gross Profit Margin and Net Profit Margin have also improved, indicating enhanced cost management and profitability. However, the EBIT and EBITDA margins have fluctuated, suggesting some operational challenges.75
Positive
Balance Sheet
The company's debt levels have decreased significantly over the years, improving the Debt-to-Equity Ratio. However, total liabilities were not reported for 2024, which creates some uncertainty. The equity ratio has improved over the years, reflecting stronger financial stability. Return on Equity (ROE) has shown positive trends, indicating effective use of equity to generate profits.65
Positive
Cash Flow
Operating cash flow has consistently increased, supporting robust free cash flow growth. The company has improved its ability to convert net income into cash flow, which is a positive indicator of cash management. The Free Cash Flow to Net Income Ratio is strong, indicating efficient management of capital expenditures.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 422.63M | 405.65M | 422.96M | 364.24M | 295.52M | Gross Profit |
| 164.33M | 153.04M | 132.09M | 107.83M | 89.13M | EBIT |
| 37.76M | 42.08M | 30.02M | 23.14M | 27.70M | EBITDA |
| 37.76M | 60.78M | 48.76M | 33.19M | 36.27M | Net Income Common Stockholders |
| 29.98M | 32.47M | 23.65M | 20.78M | 17.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 59.93M | 49.42M | 16.04M | 6.48M | 448.00K | Total Assets |
| 294.52M | 276.40M | 252.18M | 207.60M | 181.10M | Total Debt |
| 92.87M | 71.00M | 58.65M | 36.52M | 98.55M | Net Debt |
| 61.29M | 47.93M | 42.61M | 30.03M | 98.11M | Total Liabilities |
| 132.32M | 113.71M | 100.24M | 75.57M | 141.24M | Stockholders Equity |
| 155.57M | 154.12M | 141.68M | 122.90M | 32.40M |
| Cash Flow | Free Cash Flow | |||
| 47.98M | 44.05M | 14.73M | -3.70M | -21.93M | Operating Cash Flow |
| 47.98M | 53.38M | 29.47M | 8.68M | 14.55M | Investing Cash Flow |
| -5.86M | -30.17M | -17.84M | -13.28M | -37.35M | Financing Cash Flow |
| -33.62M | -16.17M | -2.07M | 10.64M | 22.45M |
Karat Packaging Inc Technical Analysis
Negative
24.80
Price Trends
28.01
Negative
29.05
Negative
27.62
Negative
Market Momentum
-1.00
Negative
37.51
Neutral
47.55
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 24.8 is below the 20-day moving average (MA) of 25.43, below the 50-day MA of 28.01, and below the 200-day MA of 27.62, indicating a bearish trend. The MACD of -1.00 indicates Negative momentum. The RSI at 37.51 is Neutral, neither overbought nor oversold. The STOCH value of 47.55 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $499.71M | 16.74 | 19.36% | 6.35% | 4.19% | -8.17% | |
65 Neutral | $846.49M | 35.20 | 3.59% | 0.77% | 3.52% | -38.88% | |
60 Neutral | $355.43M | 49.51 | 2.53% | 5.67% | 2.86% | -85.38% | |
60 Neutral | $6.55B | 11.40 | 3.24% | 4.25% | 2.38% | -21.28% | |
57 Neutral | $1.66B | ― | -69.06% | 14.39% | 2.00% | 46.00% | |
53 Neutral | $313.31M | ― | -3.34% | ― | 9.69% | 31.57% | |
51 Neutral | $1.75B | ― | -7.89% | ― | -8.09% | -1.97% |
* Consumer Cyclical Sector Average
Performance Comparison
KRT
Karat Packaging Inc
24.80
-0.67
-2.63%
MYE
Myers Industries
9.89
-11.23
-53.17%
OI
O-I Glass
11.23
-3.66
-24.58%
TRS
Trimas
20.99
-5.11
-19.58%
PACK
Ranpak Holdings
3.85
-3.54
-47.90%
AMBP
Ardagh Metal Packaging
2.76
-0.55
-16.62%
Karat Packaging Inc Earnings Call Summary
Earnings Call Date: Mar 13, 2025 | % Change Since: -14.34% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in sales volume and margin expansion along with strategic geographical growth and eco-friendly product demand. However, challenges in pricing, decrease in online sales, and increased operating expenses were noted. The company remains optimistic about future growth, supported by a strong cash flow and strategic initiatives.Highlights
Strong Sales Volume and Gross Margin Growth
Sales volume grew 14% and net sales increased 6.3% over the prior year quarter. Gross margin expanded to 39.2% from 35.7% in the previous year.
Eco-Friendly Product Sales Increase
Sales of Eco-Friendly products increased by 11% year over year, representing 34.5% of total sales.
Geographical Expansion and New Distribution Center
Strong growth in the Midwest and plans for a new 187,000 square foot distribution center near their headquarters in Chino, California.
Increased Dividend and Positive Cash Flow
Increased quarterly cash dividend to $0.45 per share and generated $8.3 million in operating cash flow.
Improved Net Income and Adjusted EBITDA
Net income for the fourth quarter increased 40.3% to $5.9 million, and adjusted EBITDA rose to $11.3 million from $8.6 million year over year.
Lowlights
Pricing Challenges
Pricing was unfavorable by $5.4 million year over year, indicating challenges in maintaining pricing power.
Decrease in Online Sales
Online sales were down 6.1% or $1.1 million, reflecting the impact of prior adjustments.
Increased Operating Expenses
Operating expenses for the fourth quarter increased 10.4% to $32.5 million, driven by higher labor costs, rent, and stock-based compensation.
Company Guidance
During the 2024 fourth quarter earnings call, Karat Packaging provided guidance for 2025, highlighting several key metrics. The company expects first-quarter net sales to increase by 6% to 8% year-over-year, with a gross margin target of 37% to 39%. For the full year, they anticipate revenue growth of 9% to 11%, maintaining a gross margin between 36% and 38%. Adjusted EBITDA margin is projected to reach the low to mid-double digits. In the fourth quarter of 2024, Karat reported net sales of $101.6 million, up 6.3% from the previous year, with a gross margin expansion of 350 basis points to 39.2%. The company's net income rose 40.3% to $5.9 million, while adjusted EBITDA increased from $8.6 million to $11.3 million. Karat also announced an increase in the quarterly cash dividend to $0.45 per share. Looking ahead, the company plans to enhance operational efficiencies, supported by a new 187,000 square foot distribution center, and will invest in automation to drive productivity.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.