Karat Packaging (NASDAQ:KRT) Trading 15.7% Higher on Better-Than-Expected Earnings

Key Points

• Karat Packaging shares jumped 15.7% after the company reported quarterly earnings of $1.48 per share, well above the $0.47 analyst consensus, while revenue of $136.30 million slightly exceeded expectations.
• The company raised its quarterly dividend to $0.47, or $1.88 annually, implying a 3.8% yield; however, its payout ratio stands at 113.92%.
• Analyst sentiment remains mixed, with the stock carrying an overall “Hold” rating and an average price target of $36.50, substantially below its recent trading level near $49.

Karat Packaging Inc. (NASDAQ:KRT - Get Free Report) shares traded up 15.7% on Friday following a better than expected earnings announcement. The company traded as high as $48.76 and last traded at $49.04. Approximately 44,121 shares traded hands during mid-day trading, a decline of 54% from the average daily volume of 95,620 shares. The stock had previously closed at $42.37.

The company reported $1.48 earnings per share for the quarter, topping analysts' consensus estimates of $0.47 by $1.01. Karat Packaging had a net margin of 6.61% and a return on equity of 19.87%. The company had revenue of $136.30 million for the quarter, compared to analysts' expectations of $135.46 million.

Karat Packaging Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, August 28th. Stockholders of record on Friday, August 21st will be issued a $0.47 dividend. This represents a $1.88 annualized dividend and a dividend yield of 3.8%. This is a positive change from Karat Packaging's previous quarterly dividend of $0.45. The ex-dividend date is Friday, August 21st. Karat Packaging's payout ratio is currently 113.92%.

Analyst Upgrades and Downgrades

A number of research firms have weighed in on KRT. Lake Street Capital reiterated a "buy" rating and set a $39.00 price target on shares of Karat Packaging in a research note on Friday, May 8th. The Goldman Sachs Group cut shares of Karat Packaging to a "neutral" rating in a research note on Thursday, June 4th. William Blair upgraded Karat Packaging from a "market perform" rating to an "outperform" rating in a research report on Thursday, June 4th. Bank of America upped their price target on Karat Packaging from $23.00 to $34.00 and gave the stock an "underperform" rating in a research note on Tuesday, July 14th. Finally, Wall Street Zen lowered shares of Karat Packaging from a "buy" rating to a "hold" rating in a research report on Saturday, July 25th. Three equities research analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat.com, Karat Packaging currently has an average rating of "Hold" and an average price target of $36.50.

Institutional Inflows and Outflows

Several hedge funds have recently added to or reduced their stakes in KRT. Vanguard Group Inc. grew its stake in shares of Karat Packaging by 12.0% during the 3rd quarter. Vanguard Group Inc. now owns 477,450 shares of the company's stock worth $12,037,000 after purchasing an additional 51,179 shares during the period. Wasatch Advisors LP increased its holdings in Karat Packaging by 3.3% in the 2nd quarter. Wasatch Advisors LP now owns 330,961 shares of the company's stock valued at $9,320,000 after purchasing an additional 10,617 shares during the last quarter. Ranger Investment Management L.P. boosted its stake in shares of Karat Packaging by 8.1% in the first quarter. Ranger Investment Management L.P. now owns 325,104 shares of the company's stock valued at $9,077,000 after purchasing an additional 24,405 shares during the period. Polar Asset Management Partners Inc. boosted its stake in shares of Karat Packaging by 57.1% in the 4th quarter. Polar Asset Management Partners Inc. now owns 314,100 shares of the company's stock valued at $7,089,000 after buying an additional 114,204 shares during the period. Finally, Bank of Montreal Can purchased a new stake in Karat Packaging during the 4th quarter worth about $5,216,000. 25.20% of the stock is owned by institutional investors and hedge funds.

Karat Packaging Stock Performance

The firm has a fifty day simple moving average of $34.01 and a 200-day simple moving average of $29.25. The company has a quick ratio of 1.15, a current ratio of 2.29 and a debt-to-equity ratio of 0.15. The company has a market cap of $986.02 million, a PE ratio of 31.01, a price-to-earnings-growth ratio of 1.83 and a beta of 0.82.

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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