Is Karat Packaging, Inc. overvalued or undervalued?

As of 8 May 2025, the valuation grade for Karat Packaging, Inc. moved from expensive to very attractive, indicating a significant shift in its perceived value. The company is currently considered undervalued, supported by a P/E ratio of 20, an EV to EBITDA of 10.98, and a Price to Book Value of 4.09. In comparison, a peer like Karat Packaging has a P/E of 15.533 and an EV to EBITDA of 8.1525, suggesting that Karat Packaging, Inc. is trading at a premium relative to its peers.
Despite its attractive valuation metrics, Karat Packaging has underperformed against the S&P 500 in recent periods, with a year-to-date return of -19.37% compared to the index's 12.22%. This underperformance highlights the potential for value realization as market conditions improve.