Value
5.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 6.9 |
| P/S | 9.0 |
| EV/EBITDA | 3.7 |
| Fwd P/E | 6.2 |
| PEG | 3.3 |
- ▸Forward P/E: 20.6x
- ▸PEG: 3.61
KRT · Why this verdict
Why Karat Packaging (KRT) is rated BUY WAIT
Updated
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VerdictBUY WAIT
Overall score6.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Karat Packaging shows a wide economic moat with compounder-quality returns and a strong Piotroski F-Score of 9/9, alongside strong overbought momentum, but the stock has already reached its analyst target with a negative asymmetry ratio, two recent earnings misses, and a PEG ratio that looks rich relative to its growth rate.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has a wide economic moat and compounder-quality characteristics of strong returns plus growth, backed by a Piotroski F-Score of 10.0 (9/9). Bull case | Piotroski F-Score should stay at 8 or higher and the moat score should remain elevated over the next 12 months if the compounder quality thesis holds. | ↑Improving |
| CounterA near-perfect Piotroski score alongside consecutive earnings misses suggests the balance-sheet-quality signal may be outpacing near-term operating execution. | ||
The company has posted consecutive earnings misses in 2 of its last 4 reported quarters. Bear case | The company should return to at least an in-line or beat result over the next two reported quarters if the miss trend is set to reverse. | ↓Deteriorating |
| CounterThe two most recent reported quarters were both beats (6.25% and 21.43% surprises), suggesting the miss pattern may already be reversing. | ||
The stock has already reached its V8 analyst target, implying -23.1% of downside versus the modeled fair value, with the V9 panel flagging a negative asymmetry ratio of -1.5. Warnings | The asymmetry ratio should turn positive, rising above 1.0, over the next 12 months for position sizing to move off avoid. | ↓Deteriorating |
| CounterThe passed momentum gate at 7.5 shows the stock still rallying hard, which could push the analyst target higher before the stock needs to correct. | ||
The stock is overbought with an RSI of 81, rising on-balance volume, and trading above its 200-day moving average, with the momentum gate passing at 7.5 against the 5.5 threshold. Momentum breakdown | RSI should stay above 50 and momentum score should remain above 6.0 over the next 12 months if the strength persists. | ↑Improving |
| CounterAn RSI this extreme near a 52-week high sharply raises the risk of a near-term pullback as the rally becomes overextended. | ||
The stock trades at a forward P/E of 14.1x with a PEG ratio of 2.52, above the level typically considered attractively priced relative to its growth rate. Valuation breakdown | PEG ratio should compress below 1.5 over the next 12 months if earnings growth accelerates or the multiple contracts. | →Stable |
| CounterA wide economic moat and compounder-quality characteristics can justify a premium PEG multiple relative to lower-quality peers. | ||
The company has a wide economic moat and compounder-quality characteristics of strong returns plus growth, backed by a Piotroski F-Score of 10.0 (9/9).
↑ImprovingBull case
- Expectation
- Piotroski F-Score should stay at 8 or higher and the moat score should remain elevated over the next 12 months if the compounder quality thesis holds.
CounterA near-perfect Piotroski score alongside consecutive earnings misses suggests the balance-sheet-quality signal may be outpacing near-term operating execution.
The company has posted consecutive earnings misses in 2 of its last 4 reported quarters.
↓DeterioratingBear case
- Expectation
- The company should return to at least an in-line or beat result over the next two reported quarters if the miss trend is set to reverse.
CounterThe two most recent reported quarters were both beats (6.25% and 21.43% surprises), suggesting the miss pattern may already be reversing.
The stock has already reached its V8 analyst target, implying -23.1% of downside versus the modeled fair value, with the V9 panel flagging a negative asymmetry ratio of -1.5.
↓DeterioratingWarnings
- Expectation
- The asymmetry ratio should turn positive, rising above 1.0, over the next 12 months for position sizing to move off avoid.
CounterThe passed momentum gate at 7.5 shows the stock still rallying hard, which could push the analyst target higher before the stock needs to correct.
The stock is overbought with an RSI of 81, rising on-balance volume, and trading above its 200-day moving average, with the momentum gate passing at 7.5 against the 5.5 threshold.
↑ImprovingMomentum breakdown
- Expectation
- RSI should stay above 50 and momentum score should remain above 6.0 over the next 12 months if the strength persists.
CounterAn RSI this extreme near a 52-week high sharply raises the risk of a near-term pullback as the rally becomes overextended.
The stock trades at a forward P/E of 14.1x with a PEG ratio of 2.52, above the level typically considered attractively priced relative to its growth rate.
→StableValuation breakdown
- Expectation
- PEG ratio should compress below 1.5 over the next 12 months if earnings growth accelerates or the multiple contracts.
CounterA wide economic moat and compounder-quality characteristics can justify a premium PEG multiple relative to lower-quality peers.
Per-dimension breakdown
Quality
7.0/10data confidence 71%| Component | Sub-score |
|---|---|
| Gross margin | 4.1 |
| Op margin | 10.0 |
| Net margin | 5.1 |
| Moat | 5.9 |
| Piotroski F | 10.0 |
- ▸Strong Piotroski F-Score: 9/9
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 10.0 |
Momentum
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 6.5 |
- ▸Overbought (RSI 90)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.2 |
| Analyst rating | 5.9 |
| Price target | 2.6 |
- ▸LLM news sentiment: +0.45 (n=2)
- ▸Light analyst coverage (2.0) — signal dampened
- ▸Below analyst target
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 8.3 |
| growth rank | 5.8 |
- ▸Best-in-class margins
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.3 |
| 52w position | 9.8 |
Risk (lower is worse)
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 8.9 |
| volatility | 2.4 |
| beta | 8.3 |
| debt equity | 8.0 |
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.0 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 4.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=+2|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (7)
- MOMENTUM:7.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:86d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.97
Upside
-29.5%
Downside
15.0%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.0B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.8>=5.5. Top dim: Momentum at 7.8; weakest: Technical at 3.4. No conviction either direction.
The strongest dimensions are Momentum at 7.8, Growth at 7.5, and Insider at 7.3; the weakest are Technical at 3.4, Sentiment at 5.3, and Value at 5.5. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.97 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Target Reached Negative Asymmetry
Trip ifAsymmetry ratio falls below -3.0, worse than the current -1.54.
- P2Wide Moat Compounder Quality
Trip ifPiotroski F-Score falls below 7 out of 9, down from the current 10.0.
- P3Consecutive Earnings Misses
Trip ifEarnings surprise stays below 0% for a 3rd consecutive quarter, extending the current miss pattern.
- P4Overbought Momentum Extended
Trip ifRSI falls below 50 from the current overbought reading of 81.
- P5Rich Peg Multiple
Trip ifPEG ratio rises above 4.0, up from the current 2.52.