Karat Packaging Inc. — Cyborg Score 5/10

Strategic Profile

Founded as Lollicup, Karat Packaging distributes and manufactures environmentally-friendly disposable foodservice packaging solutions. The company operates multiple product brands including Karat Earth (eco-friendly options), Tea Zone (bubble tea ingredients), and Total Clean (janitorial products), diversifying revenue streams across the foodservice supply chain.

Cyborg Score Rationale

Foodservice packaging supplier Karat Packaging met Wall Streets revenue expectations in Q3 CY2025, with sales up 10.4% year on year to $124.5 million. However, Operating Margin declined to 6.9% from 10% in the same quarter last year and Free Cash Flow was -$2.51 million, down from $18.63 million in the same quarter last year.

Top Insights

• Q3 2025 revenue reached $124.5 million, up 10.4% year-over-year, meeting market expectations
• Operating margins compressed significantly to 6.9% from 10% YoY, and free cash flow turned negative at -$2.51 million
• The company provides new product development, design, printing, and logistics services
• BofA Securities downgraded Karat Packaging from Buy to Underperform in recent coverage

Named Competitors

• Pactiv Evergreen — Public competitor in disposable foodservice products
• Dart Container — Private competitor in disposable foodservice packaging
• WinCup — Private competitor in disposable foodservice products

Recent Developments

• (January 2026) BofA Securities downgraded KRT from Buy to Underperform with lower price target
• (November 2025) Q3 2025 earnings beat on EPS ($0.37 vs $0.39 estimate) with 10.4% YoY revenue growth
• (August 2025) Q2 2025 achieved quarterly records for both revenue and net income

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