Head to Head Analysis: Karat Packaging (NASDAQ:KRT) vs. urban-gro (NASDAQ:UGRO)

urban-gro (NASDAQ:UGRO) and Karat Packaging (NASDAQ:KRT) are both small-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Profitability

This table compares urban-gro and Karat Packaging’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
urban-gro	-82.11%	-118.44%	-33.76%
Karat Packaging	10.18%	30.62%	16.67%

Risk and Volatility

urban-gro has a beta of -2.91, suggesting that its stock price is 391% less volatile than the S&P 500. Comparatively, Karat Packaging has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Earnings & Valuation

This table compares urban-gro and Karat Packaging”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
urban-gro	$17.40 million	0.01	-$22.10 million	($27.87)	-0.00
Karat Packaging	$467.74 million	2.06	$31.48 million	$2.50	19.36

Karat Packaging has higher revenue and earnings than urban-gro. urban-gro is trading at a lower price-to-earnings ratio than Karat Packaging, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

20.6% of urban-gro shares are held by institutional investors. Comparatively, 25.2% of Karat Packaging shares are held by institutional investors. 4.4% of urban-gro shares are held by company insiders. Comparatively, 57.9% of Karat Packaging shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for urban-gro and Karat Packaging, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
urban-gro	1	0	0	0	1.00
Karat Packaging	1	2	3	0	2.33

Karat Packaging has a consensus target price of $36.50, suggesting a potential downside of 24.57%. Given Karat Packaging’s stronger consensus rating and higher probable upside, analysts clearly believe Karat Packaging is more favorable than urban-gro.

Summary

Karat Packaging beats urban-gro on 14 of the 14 factors compared between the two stocks.

About urban-gro

urban-gro, Inc. engages in the designing, engineering, building, and integrating complex environmental equipment systems for indoor controlled environment agriculture (CEA) cultivation and retail facilities in the United States, Canada, and Europe. The company provides architectural design, engineering, and construction services comprising pre-construction, cultivation space programming (CSP), architectural and interior design, engineering, integrated cultivation design, owner's representative/construction management, and general contracting services; and maintenance, training, and support services. It also offers facility and equipment commissioning services; gro-care crop and asset protection services, including training services, equipment maintenance services, asset protection program, and an interactive online operating support system for gro-care and client document delivery and project management; and property condition assessment services. In addition, the company provides integrated equipment systems solutions, such as design, source, and integration of complex environmental equipment systems comprising heating, ventilation, and air conditioning solutions, as well as environmental control, fertigation, irrigation distribution, water treatment, and wastewater reclamation systems; and commercial horticulture lighting solutions, rolling and automated container benching systems, specialty fans, microbial mitigation, and odor reduction systems. Further, it offers value-Added Reselling (VAR) of cultivation equipment systems; and strategic vendor relationships with premier manufacturers. It primarily markets and sells its solutions to clients in the CEA that includes operators and facilitators in the cannabis and produce markets; and commercial sectors comprising food and beverage consumer packaged goods companies, healthcare, higher education, and hospitality. urban-gro, Inc. was founded in 2014 and is based in Lafayette, Colorado.

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.