Karat Packaging (NASDAQ:KRT – Get Free Report) released its earnings results on Thursday. The company reported $1.48 EPS for the quarter, topping the consensus estimate of $0.47 by $1.01, FiscalAI reports. The business had revenue of $136.30 million during the quarter, compared to analysts’ expectations of $135.46 million. Karat Packaging had a return on equity of 31.42% and a net margin of 10.18%.
Here are the key takeaways from Karat Packaging’s conference call:
- Record sales and strong online growth: Second-quarter net sales rose 9.9% year over year to $136.3 million, while online sales increased 23.6%; management said July online sales growth accelerated to more than 37% and reiterated its $100 million full-year online revenue target.
- Underlying profitability remained solid despite higher costs. Excluding the $25.8 million IEEPA tariff refund, gross margin was 37.7%, supported by sourcing diversification, potential lower ocean freight, and favorable currency movements.
- Growth investments and customer wins are expanding the platform: Karat added four chain accounts and is finalizing a 47,000-square-foot Orlando distribution center expected to open in the third quarter, improving Southeast fulfillment and e-commerce delivery times.
- Management expects continued top-line growth but sharply lower margins after the tariff benefit fades. Third-quarter revenue is projected to grow at a low-double-digit rate, with gross margin of 35%–37% and adjusted EBITDA margin of 9%–11%; full-year guidance calls for gross margin in the low 40% range and adjusted EBITDA margin around the mid-teens.
- Operating expenses remain a pressure point. Shipping and transportation, salaries and benefits, online platform costs, and marketing expenses all increased, prompting initiatives to use Karat’s internal fleet and improve labor efficiency.
Karat Packaging Stock Up 11.1%
Shares of NASDAQ:KRT traded up $4.72 during mid-day trading on Friday, hitting $47.09. 380,663 shares of the company traded hands, compared to its average volume of 120,295. The stock has a market cap of $939.92 million, a P/E ratio of 18.84, a P/E/G ratio of 2.04 and a beta of 0.82. The company has a current ratio of 2.29, a quick ratio of 1.15 and a debt-to-equity ratio of 0.15. Karat Packaging has a 12-month low of $20.61 and a 12-month high of $50.00. The stock has a 50-day moving average price of $34.40 and a two-hundred day moving average price of $29.37.
Karat Packaging Increases Dividend
Analysts Set New Price Targets
A number of research firms have issued reports on KRT. Weiss Ratings upgraded Karat Packaging from a “hold (c+)” rating to a “buy (b-)” rating in a report on Wednesday, July 29th. Wall Street Zen lowered shares of Karat Packaging from a “buy” rating to a “hold” rating in a research note on Saturday, July 25th. William Blair upgraded shares of Karat Packaging from a “market perform” rating to an “outperform” rating in a research report on Thursday, June 4th. Bank of America increased their target price on shares of Karat Packaging from $23.00 to $34.00 and gave the stock an “underperform” rating in a research note on Tuesday, July 14th. Finally, The Goldman Sachs Group cut shares of Karat Packaging to a “neutral” rating in a report on Thursday, June 4th. Three investment analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat.com, the stock currently has an average rating of “Hold” and an average target price of $36.50.
Institutional Investors Weigh In On Karat Packaging
Institutional investors and hedge funds have recently bought and sold shares of the stock. Stifel Financial Corp increased its position in shares of Karat Packaging by 1.8% during the fourth quarter. Stifel Financial Corp now owns 22,798 shares of the company’s stock valued at $515,000 after acquiring an additional 398 shares during the last quarter. First Trust Advisors LP boosted its position in Karat Packaging by 1.9% in the fourth quarter. First Trust Advisors LP now owns 27,345 shares of the company’s stock worth $617,000 after purchasing an additional 508 shares during the last quarter. Lazard Asset Management LLC boosted its position in Karat Packaging by 1.9% in the second quarter. Lazard Asset Management LLC now owns 40,390 shares of the company’s stock worth $1,137,000 after purchasing an additional 770 shares during the last quarter. Punch & Associates Investment Management Inc. grew its stake in Karat Packaging by 1.8% in the 4th quarter. Punch & Associates Investment Management Inc. now owns 62,615 shares of the company’s stock valued at $1,413,000 after purchasing an additional 1,100 shares during the period. Finally, Barclays PLC grew its stake in Karat Packaging by 2.6% in the 4th quarter. Barclays PLC now owns 42,766 shares of the company’s stock valued at $965,000 after purchasing an additional 1,102 shares during the period. 25.20% of the stock is owned by hedge funds and other institutional investors.
Key Headlines Impacting Karat Packaging
Here are the key news stories impacting Karat Packaging this week:
- Positive Sentiment: Major EPS beat: Quarterly diluted earnings reached approximately $1.46–$1.48 per share, compared with analyst estimates ranging from $0.47 to $0.51 and $0.57 a year earlier. Karat Packing Beats Q2 Earnings and Revenue Estimates
- Positive Sentiment: Revenue growth remained solid: Second-quarter revenue rose 9.9% year over year to $136.3 million, narrowly exceeding the $135.46 million consensus estimate. Karat Packaging Reports Second Quarter 2026 Financial Results
- Positive Sentiment: Profitability and cash flow improved sharply: Gross profit increased 57.1% to $77.2 million, operating profit more than doubled to $37.6 million, and operating cash flow reached $33.2 million. Capital spending was modest at $1.4 million, while total liabilities declined to $142.5 million. Karat Packaging Q2 2026 Earnings
- Positive Sentiment: Dividend increased: Karat Packaging declared a quarterly dividend of $0.47 per share, up from $0.45, with payment scheduled for August 28 to shareholders of record on August 21. Karat Packaging Dividend Information
- Neutral Sentiment: Institutional activity was mixed: Some hedge funds added shares, while others reduced or eliminated positions. William Blair maintained an “Outperform” rating, but the limited analyst coverage provides relatively little confirmation of broader Wall Street sentiment.
- Neutral Sentiment: Valuation and expectations are higher: Following the earnings-driven rally, KRT trades near its 52-week high with a price-to-earnings ratio near 30, increasing the importance of continued earnings growth.
Karat Packaging Company Profile
Karat Packaging Technologies, Inc (NASDAQ: KRT) is a U.S.-based provider of premium packaging solutions for consumer goods and industrial products. The company specializes in the design, manufacture and delivery of high-quality litho-laminated folding cartons, tubes and flexible packaging. Karat Packaging operates an integrated production model that combines prepress, printing, converting and finishing capabilities to support the branding and shelf-appeal needs of its customers.
The company serves a diverse range of end markets, including food and beverage, confectionery, health and beauty, pharmaceuticals, specialty chemicals and promotional packaging.
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