Karat Packaging (NASDAQ:KRT) Issues Quarterly Earnings Results, Misses Expectations By $0.17 EPS

Karat Packaging (NASDAQ:KRT) announced its earnings results on Thursday. The company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.41 by ($0.17), FiscalAI reports. Karat Packaging had a net margin of 9.39% and a return on equity of 28.67%. The business had revenue of $134.74 million for the quarter, compared to the consensus estimate of $140.33 million.

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

• Q3 net sales grew 8.2% to $134.7 million, led by 37.7% growth in online sales. The company said delayed chain-account orders contributed to a $2.5 million revenue shortfall versus expectations, with some orders shifting to Q4.
• Profitability weakened as higher resin, import, ocean-freight, and domestic shipping costs pressured results: gross margin fell to 33.5% from 34.5%, adjusted EBITDA declined to $8.9 million from $13.1 million, and net income fell to $4.7 million from $7.6 million.
• Karat expects Q4 and full-year 2026 sales growth of 9%–11%. Its margin outlook is more tempered: Q4 gross margin is forecast at 33%–35% with adjusted EBITDA margin in the high single digits, while full-year margin guidance includes tariff refunds recorded in the first half.
• The company reported four additional chain-account wins, expansion of earlier wins, and continued e-commerce momentum; East Coast and Midwest sales rose 19% and 22%, respectively. It expects its Orlando distribution center to be fully operational in November and sees potential for fiber and paper product sales to grow.
• Management described constrained container availability and elevated freight costs, with some customer orders already being shorted. It has implemented price increases and announced further increases of 3%–13% for January 2027, but said cost and supply pressures may persist.

Karat Packaging Price Performance

Shares of KRT stock traded down $17.90 on Friday, reaching $33.54. The company’s stock had a trading volume of 689,899 shares, compared to its average volume of 154,324. The stock’s fifty day simple moving average is $51.53 and its 200-day simple moving average is $36.31. The company has a current ratio of 2.25, a quick ratio of 1.25 and a debt-to-equity ratio of 0.13. The company has a market capitalization of $668.45 million, a price-to-earnings ratio of 14.21, a price-to-earnings-growth ratio of 0.92 and a beta of 0.79. Karat Packaging has a 1 year low of $20.61 and a 1 year high of $56.06.

Karat Packaging Announces Dividend

The company also recently announced a quarterly dividend, which will be paid on Friday, November 27th. Stockholders of record on Thursday, November 19th will be given a dividend of $0.47 per share. This represents a $1.88 dividend on an annualized basis and a dividend yield of 5.6%. The ex-dividend date is Thursday, November 19th. Karat Packaging’s dividend payout ratio is currently 75.20%.

Analyst Upgrades and Downgrades

KRT has been the topic of several recent analyst reports. Lake Street Capital restated a “buy” rating and set a $60.00 price objective on shares of Karat Packaging in a research report on Monday, September 14th. Bank of America lifted their target price on shares of Karat Packaging from $23.00 to $34.00 and gave the company an “underperform” rating in a research note on Tuesday, July 14th. Wall Street Zen downgraded shares of Karat Packaging from a “buy” rating to a “hold” rating in a report on Saturday. Finally, Weiss Ratings upgraded Karat Packaging from a “buy (b-)” rating to a “buy (b)” rating in a research note on Wednesday, August 12th. Three investment analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, the company has a consensus rating of “Hold” and an average price target of $47.00.

Key Stories Impacting Karat Packaging

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

• Positive Sentiment: Karat said its pipeline continued to strengthen and reported topline growth; new accounts and supply-chain initiatives may support future performance, though margin pressures remain. Karat Packaging Q3 results
• Positive Sentiment: The company also declared a quarterly dividend of $0.47 per share, which may appeal to income-focused investors.
• Negative Sentiment: Third-quarter adjusted EPS was $0.24, below the cited consensus estimate of $0.41, while revenue of $134.74 million missed the $140.33 million estimate. EPS was also down from $0.37 a year earlier. Q3 earnings report
• Negative Sentiment: FY 2026 revenue guidance of $509.8 million–$519.2 million came in below the $524.7 million consensus. Fourth-quarter guidance of $126.0 million–$128.3 million was likewise below the $131.3 million forecast, reinforcing concerns about near-term growth. Q3 deep dive

Karat Packaging Company Profile

Karat Packaging Inc is a foodservice packaging company that manufactures and distributes disposable products for restaurants, cafés, convenience stores, supermarkets, institutional foodservice providers and other businesses. The company is headquartered in Chino, California, and serves customers primarily across North America through its distribution and manufacturing operations.

Its product portfolio includes paper and plastic cups, food containers, lids, cutlery, straws, gloves, napkins, bags and other supplies used for food preparation, packaging and takeout service.