Results: Karat Packaging Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders of Karat Packaging Inc. (NASDAQ:KRT) will be pleased this week, given that the stock price is up 15% to US$47.09 following its latest quarterly results. Revenues were US$136m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.46, an impressive 211% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the current consensus from Karat Packaging's three analysts is for revenues of US$523.9m in 2026. This would reflect a reasonable 6.2% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 5.6% to US$2.66. Before this earnings report, the analysts had been forecasting revenues of US$524.2m and earnings per share (EPS) of US$1.79 in 2026. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

View our latest analysis for Karat Packaging

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 14% to US$41.50. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Karat Packaging, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$33.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Karat Packaging's past performance and to peers in the same industry. It's clear from the latest estimates that Karat Packaging's rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 5.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Karat Packaging is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Karat Packaging following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Karat Packaging going out to 2028, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Karat Packaging (of which 1 doesn't sit too well with us!) you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.