Karat Packaging Inc. Common Stock (KRT)

FairStock Score: 69/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for businesses that earn high returns on capital and sell at a sensible price. Karat Packaging is a steady, unglamorous supplier of disposable foodservice products. Revenue rose from $405.7 million in fiscal 2023 to $422.6 million in fiscal 2024 and $467.7 million in fiscal 2025. Net income, however, has not followed: $32.5 million in fiscal 2023, $30.0 million in fiscal 2024, and $31.5 million in fiscal 2025. Diluted EPS was $1.63, $1.49 and $1.56 in those years. That is not a compounding machine; it is a stalwart, consistent with FairStock’s Lynch category and its five-year profit growth of 12.4% and revenue growth of 9.6%. The latest fiscal Q2 2026, ended 2026-06-30, was striking: revenue $136.3 million, net income $29.3 million, diluted EPS $1.46. One quarter nearly matched all of fiscal 2025 net income, so I would want to understand whether that profit is durable. Financial health looks good: Piotroski F-Score 8/9, Altman Z-Score 3.63, debt-to-equity 0.42, trailing free cash flow $51.2 million and an FCF yield of 4.8%. But returns on total capital are modest—ROCE 7.29%—even as ROE is 30.62%. At the close on 2026-10-13, the price was $53.86. FairStock’s P/E is 21.54, P/B 6.44, PEG 4.16, and EV/EBITDA 12.28. The Graham Number is $22.02, leaving a negative margin of safety of 144.60%. That is not a bargain. I see a decent, cash-generative packaging supplier, but not one with a wide moat or a margin of safety at today’s price.

In plain English: Karat Packaging makes and sells disposable foodservice packaging, such as containers, cups, cutlery, and compostable items, mostly for restaurants and food sellers. The business looks financially solid, with growing sales and strong cash generation, but profits have not grown smoothly and the latest quarter was unusually profitable. At the recent price, the shares look expensive compared with the company’s asset value and a conservative earnings estimate.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer