Karat Packaging (NASDAQ:KRT) Shares Gap Down on Disappointing Earnings

Shares of Karat Packaging Inc. (NASDAQ:KRT) gapped down before the market opened on Friday following a weaker than expected earnings announcement. The stock had previously closed at $51.44, but opened at $42.02. Karat Packaging shares last traded at $38.4970, with a volume of 54,201 shares trading hands.

The company reported $0.24 earnings per share for the quarter, missing analysts’ consensus estimates of $0.41 by ($0.17). The business had revenue of $134.74 million during the quarter, compared to analysts’ expectations of $140.33 million. Karat Packaging had a return on equity of 30.62% and a net margin of 10.18%.

Karat Packaging Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Friday, November 27th. Investors 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 yield of 4.9%. The ex-dividend date of this dividend is Thursday, November 19th. Karat Packaging’s dividend payout ratio (DPR) is 75.20%.

Key Stories Impacting Karat Packaging

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

• Positive Sentiment: Karat declared a quarterly dividend of $0.47 per share, payable November 27 to shareholders of record November 19. The annualized dividend is $1.88, equivalent to a reported yield of roughly 3.6%–3.7%. Dividend announcement
• Neutral Sentiment: The company described its pipeline as strengthening and reported solid topline growth, though quarterly revenue still came in below analysts’ forecasts. Third-quarter results
• Neutral Sentiment: Trading in KRT was temporarily paused under a Limit Up-Limit Down (LULD) halt. This is a volatility-related trading pause and, by itself, does not indicate a change in the company’s fundamentals.
• Neutral Sentiment: Sell-side analysts reportedly assigned the stock a “Hold” rating, signaling a wait-and-see stance rather than a clear positive or negative catalyst. Analyst rating
• Negative Sentiment: Third-quarter adjusted EPS was $0.24, below analyst estimates (reported at about $0.41–$0.46) and down from $0.37 a year earlier. Revenue of $134.74 million also missed the $140.33 million consensus. The earnings and sales shortfalls are the main reason for pressure on the stock. Quarterly earnings estimates

Analysts Set New Price Targets

A number of equities research analysts have weighed in on the stock. Lake Street Capital restated a “buy” rating and issued a $60.00 price objective on shares of Karat Packaging in a 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 report on Tuesday, July 14th. Weiss Ratings raised Karat Packaging from a “buy (b-)” rating to a “buy (b)” rating in a research report on Wednesday, August 12th. Finally, Wall Street Zen raised Karat Packaging from a “hold” rating to a “buy” rating in a research report on Saturday, August 15th. Three equities research analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the company presently has a consensus rating of “Hold” and an average price target of $47.00.

Hedge Funds Weigh In On Karat Packaging

Several large investors have recently modified their holdings of KRT. BlackRock Inc. bought a new position in Karat Packaging in the 2nd quarter worth about $19,840,000. Ranger Investment Management L.P. bought a new stake in Karat Packaging during the 2nd quarter valued at about $11,129,000. De Lisle Partners LLP bought a new stake in Karat Packaging during the 2nd quarter valued at about $7,307,000. Bank of New York Mellon Corp bought a new stake in Karat Packaging during the 2nd quarter valued at about $5,337,000. Finally, Punch & Associates Investment Management Inc. purchased a new position in Karat Packaging in the second quarter worth about $3,290,000. Hedge funds and other institutional investors own 25.20% of the company’s stock.

Karat Packaging Price Performance

The company has a quick ratio of 1.25, a current ratio of 2.25 and a debt-to-equity ratio of 0.13. The firm has a market capitalization of $761.30 million, a PE ratio of 15.29, a PEG ratio of 1.48 and a beta of 0.79. The firm’s fifty day simple moving average is $51.85 and its 200-day simple moving average is $36.26.

About Karat Packaging

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.