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

Karat Packaging (NASDAQ:KRT) announced its quarterly 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 return on equity of 28.67% and a net margin of 9.39%. The company had revenue of $134.74 million for the quarter, compared to analyst estimates 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 Trading Down 34.8%

Shares of NASDAQ:KRT traded down $17.90 during mid-day trading on Friday, reaching $33.54. 689,899 shares of the company’s stock were exchanged, compared to its average volume of 154,324. The company has a debt-to-equity ratio of 0.13, a quick ratio of 1.25 and a current ratio of 2.25. Karat Packaging has a twelve month low of $20.61 and a twelve month high of $56.06. The firm has a market capitalization of $668.45 million, a price-to-earnings ratio of 14.21, a PEG ratio of 0.92 and a beta of 0.79. The business’s fifty day moving average price is $51.53 and its 200-day moving average price is $36.31.

Karat Packaging Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Friday, November 27th. Stockholders of record on Thursday, November 19th will be issued 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 payout ratio is 75.20%.

Key Karat Packaging News

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

Analysts Set New Price Targets

A number of brokerages recently weighed in on KRT. 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. Weiss Ratings upgraded Karat Packaging from a “buy (b-)” rating to a “buy (b)” rating in a research report on Wednesday, August 12th. Wall Street Zen downgraded Karat Packaging from a “buy” rating to a “hold” rating in a research report on Saturday. Finally, Bank of America lifted their price target on Karat Packaging from $23.00 to $34.00 and gave the company an “underperform” rating in a research note on Tuesday, July 14th. Three investment analysts have rated the stock with a Buy rating, two have given a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat, the stock presently has a consensus rating of “Hold” and an average target price of $47.00.

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.