New York, May 27, 2026, 09:03 (EDT)
- KRT last changed hands at $26.46, down 0.3% from its prior close, before the Nasdaq regular session.
- Karat’s quarterly dividend is due to be paid on or about May 28 to holders of record as of May 21.
- Margin pressure from tariffs remains the main swing factor after first-quarter sales rose 12.9%.
Karat Packaging Inc shares were little changed to weaker ahead of Wednesday’s regular trading session, with investors looking past a broad rebound in U.S. equities and toward the foodservice packaging company’s dividend payment and tariff-driven margin outlook.
Karat stock was quoted at $26.46, down 7 cents, or about 0.3%, from the prior close, with the latest trade recorded late Tuesday after hours. The Nasdaq-listed company had a market value of about $531 million.
The timing matters. U.S. markets are trading in a shortened post-holiday week after the Nasdaq and NYSE closed for Memorial Day on Monday, May 25. Regular U.S. trading was open again Tuesday and is scheduled normally on Wednesday.
The broader tape has been firm. The S&P 500 rose 0.6% on Tuesday, the Nasdaq Composite gained 1.2% to a record, and the Russell 2000 small-cap index advanced 1.8%, according to AP market data. That leaves Karat’s recent softness looking more company-specific than index-led.
Karat’s board declared a regular quarterly dividend of 45 cents a share on May 5, payable on or about May 28 to shareholders of record at the close of business on May 21, an SEC filing showed. Dividends are cash payments to shareholders, and a stock can trade softer after the record or ex-dividend date because new buyers no longer receive that payout.
The stock also carries a heavier cost story. Karat reported first-quarter net sales of $116.9 million, up 12.9% from a year earlier, while gross margin — the share of sales left after production and sourcing costs — fell to 35.5% from 39.3%. The company cited elevated tariffs and import costs.
Alan Yu, Karat’s chief executive, called the quarter “robust” and said gross margin “remained resilient,” but the details were less clean. Import duties and tariffs rose to $10.5 million from $3.4 million a year earlier, and adjusted EBITDA margin, a non-GAAP profit measure that strips out interest, taxes, depreciation, amortization and stock-based compensation, slipped to 10.7% from 11.5%. GlobeNewswire
Management’s guide gives the market something to test. Karat expects second-quarter net sales to rise 8% to 10% from a year earlier and full-year 2026 net sales to grow by low double digits. It also forecast full-year gross margin of 34% to 36%, excluding any possible tariff refund impact.
The upside case is that demand keeps holding while sourcing changes reduce pressure. In its quarterly filing, Karat said domestic purchases rose to 18.3% from 13.8% in the first quarter and that it cut sourcing from China and Taiwan while raising purchases from Malaysia and Vietnam. It also pointed to higher demand for delivery, takeout and eco-friendly products as industry tailwinds.
Competition is not standing still. Novolex completed its combination with Pactiv Evergreen in 2025, creating a larger food, beverage and specialty packaging supplier with a broad manufacturing and distribution footprint. Karat’s gains in paper bags and eco-friendly products therefore come against a bigger rival with scale in the same general foodservice and packaging channels.
But the risk is that costs move faster than price increases. Karat said raw materials such as PET plastic resin, aluminum and paperboard can fluctuate, and that it may be limited in how quickly it can pass inflation through to customers. It also said the financial impact of potential tariff refunds remains uncertain, with no refund receivable recorded as of March 31.
For now, the stock is being judged less on headline sales growth than on whether Karat can turn that growth into stable margins. The next few sessions should show whether the dividend support is enough, or whether investors keep pressing the shares until tariffs, oil-linked input costs and pricing actions settle into a clearer pattern.
