Karat Packaging (NASDAQ:KRT) Releases Earnings Results, Beats Expectations By $1.01 EPS

Karat Packaging (NASDAQ:KRT) released its quarterly earnings results on Thursday. The company reported $1.48 EPS for the quarter, topping analysts’ consensus estimates of $0.47 by $1.01, FiscalAI reports. Karat Packaging had a return on equity of 31.42% and a net margin of 10.18%.The company had revenue of $136.30 million for the quarter, compared to analyst estimates of $135.46 million.

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%

Karat Packaging stock traded up $4.72 during midday trading on Friday, reaching $47.09. The stock had a trading volume of 380,663 shares, compared to its average volume of 120,295. The firm’s fifty day simple moving average is $34.40 and its 200-day simple moving average is $29.37. Karat Packaging has a 1-year low of $20.61 and a 1-year high of $50.00. The stock has a market capitalization of $939.92 million, a P/E ratio of 18.84, a price-to-earnings-growth ratio of 2.04 and a beta of 0.82. The company has a debt-to-equity ratio of 0.15, a quick ratio of 1.15 and a current ratio of 2.29.

Karat Packaging Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, August 28th. Investors of record on Friday, August 21st will be issued a dividend of $0.47 per share. The ex-dividend date is Friday, August 21st. This is a boost from Karat Packaging’s previous quarterly dividend of $0.45. This represents a $1.88 dividend on an annualized basis and a dividend yield of 4.0%. Karat Packaging’s dividend payout ratio is 113.92%.

Wall Street Analysts Forecast Growth

KRT has been the subject of a number of research reports. Wall Street Zen cut Karat Packaging from a “buy” rating to a “hold” rating in a research note on Saturday, July 25th. Weiss Ratings upgraded shares of Karat Packaging from a “hold (c+)” rating to a “buy (b-)” rating in a report on Wednesday, July 29th. Lake Street Capital reiterated a “buy” rating and issued a $39.00 price target on shares of Karat Packaging in a report on Friday, May 8th. William Blair raised shares of Karat Packaging from a “market perform” rating to an “outperform” rating in a research report on Thursday, June 4th. Finally, Zacks Research lowered shares of Karat Packaging from a “strong-buy” rating to a “hold” rating in a report on Tuesday, May 12th. Three equities research analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, the company currently has a consensus rating of “Hold” and an average target price of $36.50.

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.

Hedge Funds Weigh In On Karat Packaging

Several hedge funds have recently made changes to their positions in KRT. Rothschild Wealth LLC acquired a new position in shares of Karat Packaging during the 4th quarter worth about $293,000. Wells Fargo & Company MN increased its position in shares of Karat Packaging by 73.7% in the fourth quarter. Wells Fargo & Company MN now owns 13,233 shares of the company’s stock valued at $299,000 after acquiring an additional 5,616 shares during the last quarter. LPL Financial LLC acquired a new stake in shares of Karat Packaging in the fourth quarter valued at about $268,000. Polymer Capital Management US LLC increased its position in shares of Karat Packaging by 23.9% in the third quarter. Polymer Capital Management US LLC now owns 12,503 shares of the company’s stock valued at $315,000 after acquiring an additional 2,410 shares during the last quarter. Finally, Rhumbline Advisers boosted its position in Karat Packaging by 14.6% during the third quarter. Rhumbline Advisers now owns 11,437 shares of the company’s stock valued at $288,000 after purchasing an additional 1,456 shares during the last quarter. 25.20% of the stock is owned by institutional investors.

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.