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

Karat Packaging (NASDAQ:KRT) announced its earnings results on Thursday. The company reported $0.34 earnings per share for the quarter, topping the consensus estimate of $0.32 by $0.02, FiscalAI reports. The business had revenue of $116.95 million during the quarter, compared to the consensus estimate 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 Price Performance

NASDAQ KRT traded down $2.34 during mid-day trading on Friday, hitting $28.07. The stock had a trading volume of 152,372 shares, compared to its average volume of 82,257. The firm’s 50 day moving average is $27.35 and its 200 day moving average is $25.00. Karat Packaging has a twelve month low of $20.61 and a twelve month high of $32.68. The company has a debt-to-equity ratio of 0.15, a current ratio of 2.30 and a quick ratio of 1.13. The stock has a market capitalization of $560.28 million, a price-to-earnings ratio of 17.77, a PEG ratio of 1.09 and a beta of 0.93.

Karat Packaging Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, May 28th. Investors of record on Thursday, May 21st will be paid a $0.45 dividend. This represents a $1.80 annualized dividend and a yield of 6.4%. The ex-dividend date of this dividend is Thursday, May 21st. Karat Packaging’s dividend payout ratio is currently 113.92%.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the company. Vanguard Group Inc. grew its holdings in Karat Packaging by 12.0% in the 3rd quarter. Vanguard Group Inc. now owns 477,450 shares of the company’s stock valued at $12,037,000 after buying an additional 51,179 shares in the last quarter. Wasatch Advisors LP grew 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 buying an additional 10,617 shares in the last quarter. Polar Asset Management Partners Inc. grew its holdings in 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 in the last quarter. Bank of Montreal Can purchased a new stake in Karat Packaging in the 4th quarter valued at $5,216,000. Finally, Geode Capital Management LLC grew its holdings in Karat Packaging by 4.7% in the 4th quarter. Geode Capital Management LLC now owns 209,242 shares of the company’s stock valued at $4,723,000 after buying an additional 9,345 shares in the last quarter. 25.20% of the stock is owned by institutional investors and hedge funds.

Key Stories 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 Ratings Changes

Several brokerages have recently weighed in on KRT. Lake Street Capital reaffirmed a “buy” rating and set a $39.00 target price on shares of Karat Packaging in a research note on Friday. Weiss Ratings reaffirmed a “hold (c+)” rating on shares of Karat Packaging in a research note on Thursday, January 22nd. Bank of America set a $24.00 target price 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 research note on Saturday. Finally, Zacks Research raised Karat Packaging from a “hold” rating to a “strong-buy” rating in a research note on Friday, March 20th. One investment analyst has rated the stock with a Strong Buy rating, one has given a Buy rating, two have issued a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat, Karat Packaging presently has an average rating of “Hold” and an average price target 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.