Karat Packaging (NASDAQ:KRT) Posts Quarterly Earnings Results, Beats Estimates By $0.02 EPS

Key Points

• Karat Packaging beat first-quarter expectations by reporting EPS of $0.34 versus the $0.32 consensus, while revenue came in at $116.95 million, also above estimates.
• Sales growth remained strong, with net sales up 12.9% year over year and management guiding for second-quarter sales growth of 8% to 10% and low double-digit growth for the full year.
• Margins were pressured by higher costs and tariffs, as gross margin fell to 35.5% from 39.3% a year ago and import duties jumped sharply, prompting the company to raise prices to help protect profitability.

Karat Packaging (NASDAQ:KRT - Get Free Report) announced its quarterly earnings results on Thursday. The company reported $0.34 EPS for the quarter, beating the consensus estimate of $0.32 by $0.02, FiscalAI reports. The firm had revenue of $116.95 million for the quarter, compared to analyst estimates of $112.98 million. Karat Packaging had a return on equity of 19.71% and a net margin of 6.61%.

Here are the key takeaways from Karat Packaging's conference call:

• Net sales rose 12.9% YoY to $116.9M in Q1, with March up ~19%-20% and online sales accelerating (Q1 online $19.5M; company targets $100M+ online this year); company guides Q2 sales growth of +8–10% and full‑year low double‑digit growth.
• Gross margin was 35.5% (down from 39.3% a year ago) as COGS increased 20% driven by higher import costs and inventory adjustments; management expects full‑year gross margin of 34–36% and is implementing mid‑May price increases to help stabilize margins.
• Company highlighted sourcing diversification and inventory strength (domestic purchases 18%, Malaysia/Vietnam 17%, new South American supplier) which management says reduces geographic risk, improves availability, and supports market‑share gains amid resin supply challenges.
• Solid cash flow and shareholder returns — Q1 operating cash flow was $7.2M, free cash flow $6.3M, liquidity of ~$36.4M plus $5.7M in short‑term investments, and the board approved a quarterly dividend of $0.45 per share.
• Tariff and commodity risk remains: import duties rose to $10.5M from $3.4M YoY, materially pressuring COGS and margins, and further oil/resin price volatility could force additional price increases or compress margins further.

Karat Packaging Stock Performance

NASDAQ:KRT traded down $2.34 during trading hours on Friday, reaching $28.07. The company had a trading volume of 152,372 shares, compared to its average volume of 82,257. Karat Packaging has a 1-year low of $20.61 and a 1-year high of $32.68. The firm has a market cap of $560.28 million, a PE ratio of 17.77, a price-to-earnings-growth ratio of 1.09 and a beta of 0.93. The business's 50 day moving average price is $27.35 and its 200-day moving average price is $25.00. The company has a debt-to-equity ratio of 0.15, a current ratio of 2.30 and a quick ratio of 1.13.

Karat Packaging Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Thursday, May 28th. Shareholders of record on Thursday, May 21st will be issued a $0.45 dividend. The ex-dividend date of this dividend is Thursday, May 21st. This represents a $1.80 dividend on an annualized basis and a yield of 6.4%. Karat Packaging's payout ratio is presently 113.92%.

Institutional Inflows and Outflows

A number of large investors have recently bought and sold shares of the stock. Stifel Financial Corp lifted its holdings in Karat Packaging by 1.8% in 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 period. First Trust Advisors LP raised its stake in shares of Karat Packaging by 1.9% during the 4th quarter. First Trust Advisors LP now owns 27,345 shares of the company's stock worth $617,000 after buying an additional 508 shares during the period. Lazard Asset Management LLC raised its stake in shares of Karat Packaging by 1.9% during the 2nd quarter. Lazard Asset Management LLC now owns 40,390 shares of the company's stock worth $1,137,000 after buying an additional 770 shares during the period. Punch & Associates Investment Management Inc. raised its stake in shares of Karat Packaging by 1.8% during the 4th quarter. Punch & Associates Investment Management Inc. now owns 62,615 shares of the company's stock worth $1,413,000 after buying an additional 1,100 shares during the period. Finally, Barclays PLC raised its stake in shares of Karat Packaging by 2.6% during the 4th quarter. Barclays PLC now owns 42,766 shares of the company's stock worth $965,000 after buying an additional 1,102 shares during the period. 25.20% of the stock is owned by institutional investors and hedge funds.

Key Headlines Impacting Karat Packaging

Here are the key news stories impacting Karat Packaging this week:

• Positive Sentiment: First-quarter 2026 results beat expectations, with EPS of $0.34 versus the $0.32 consensus and revenue of $116.95 million above estimates. Management also highlighted strong top-line growth and solid profitability, which supports the company’s operating momentum. Karat Packaging Reports First Quarter 2026 Financial Results
• Positive Sentiment: The company said it expects second-quarter net sales to rise 8% to 10% and is targeting a 35% to 37% gross margin, signaling continued growth and healthy profitability despite cost pressure. Karat Packaging expects 2Q net sales up 8% to 10% while targeting 35% to 37% gross margin
• Neutral Sentiment: Management’s earnings call and related commentary point to online sales growth and sourcing diversification as offsetting cost pressures, suggesting the business is adapting but still facing margin-related headwinds. KRT Q1 deep dive: Online sales and sourcing diversification drive growth amid cost pressures
• Neutral Sentiment: The company also announced a quarterly dividend of $0.45 per share, which may appeal to income investors, but it does not appear to be the main driver of the stock’s recent move. Karat Packaging stock and dividend information
• Negative Sentiment: Second-quarter revenue guidance of $133.9 million to $136.4 million came in below the $139.2 million consensus, which likely weighed on sentiment and helps explain the stock’s decline despite the earnings beat. Karat Packaging guidance and earnings report

Analyst Upgrades and Downgrades

KRT has been the topic of several research reports. Lake Street Capital restated a "buy" rating and set a $39.00 price target on shares of Karat Packaging in a research note on Friday. Zacks Research upgraded Karat Packaging from a "hold" rating to a "strong-buy" rating in a research note on Friday, March 20th. Bank of America set a $24.00 price target on Karat Packaging and gave the stock an "underperform" rating in a research note on Friday, March 13th. Wall Street Zen downgraded Karat Packaging from a "strong-buy" rating to a "buy" rating in a report on Saturday. Finally, Weiss Ratings reaffirmed a "hold (c+)" rating on shares of Karat Packaging in a report on Thursday, January 22nd. One analyst has rated the stock with a Strong Buy rating, one has given a Buy rating, two have given a Hold rating and one has given a Sell rating to the stock. According to data from MarketBeat.com, Karat Packaging presently has a consensus rating of "Hold" and an average target price of $31.33.

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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