Karat Packaging Q1 revenue beats estimates, helped by higher volumes

Karat Packaging

07/05/2026 22:07

Overview

US disposable foodservice products maker's Q1 revenue rose 13%, beating analyst expectations

Q1 adjusted EBITDA beat consensus; gross margin declined due to higher import tariffs

Company to implement price hikes on select plastic items to offset rising costs

Outlook

Company expects Q2 2026 net sales to rise 8-10% from prior-year qtr

Karat Packaging sees Q2 2026 gross margin at 35-37%, excluding potential tariff refund impact

Company expects full-year 2026 net sales to grow by low double-digits from prior year

Result Drivers

VOLUME AND MIX - Q1 sales growth was primarily driven by $12.1 mln in volume growth and product mix, plus $2 mln from favorable pricing

IMPORT COSTS - Gross margin declined to 35.5% from 39.3% due to higher import duty and tariffs, which rose to $10.5 mln from $3.4 mln year-over-year

ECO-FRIENDLY PRODUCT DEMAND - Sales of eco-friendly products, including new paper bags, rose 16.9% year-over-year, aided by a new national chain account

Company press release: ID:nGNX6Bf0Yw

Key Details

Metric
Beat/Miss
Actual
Consensus Estimate
Q1 Sales
Beat
$116.9 mln
$112.98 mln (3 Analysts)
Q1 Adjusted EPS
Beat
$0.34
$0.30 (2 Analysts)
Q1 Net Income
$7.1 mln
Q1 Adjusted EBITDA
Beat
$12.5 mln
$11.14 mln (3 Analysts)

Analyst Coverage

The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 1 "hold" and 1 "sell" or "strong sell"

The average consensus recommendation for the non-paper containers & packaging peer group is "buy."

Wall Street's median 12-month price target for Karat Packaging Inc is $29.50, about 0.6% below its May 6 closing price of $29.68

The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 14 three months ago

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)