Karat Packaging Inc. (NASDAQ:KRT), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$30.35 and falling to the lows of US$23.84. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Karat Packaging's current trading price of US$24.51 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Karat Packaging’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Karat Packaging

Is Karat Packaging Still Cheap?

Karat Packaging appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 17.38x is currently well-above the industry average of 13.22x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Karat Packaging’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Karat Packaging generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 28% over the next year, the near-term future seems bright for Karat Packaging. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in KRT’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe KRT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.