Comparing Karat Packaging (NASDAQ:KRT) & Herc (NYSE:HRI)

Karat Packaging (NASDAQ:KRT) and Herc (NYSE:HRI) are both industrials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Dividends

Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 4.0%. Herc pays an annual dividend of $2.80 per share and has a dividend yield of 2.0%. Karat Packaging pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Herc pays out 190.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Karat Packaging has raised its dividend for 2 consecutive years and Herc has raised its dividend for 2 consecutive years. Karat Packaging is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for Karat Packaging and Herc, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karat Packaging	1	2	3	0	2.33
Herc	0	3	6	0	2.67

Karat Packaging presently has a consensus target price of $36.50, suggesting a potential downside of 22.24%. Herc has a consensus target price of $184.43, suggesting a potential upside of 30.79%. Given Herc’s stronger consensus rating and higher probable upside, analysts plainly believe Herc is more favorable than Karat Packaging.

Profitability

This table compares Karat Packaging and Herc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Karat Packaging	10.18%	30.62%	16.67%
Herc	1.01%	10.33%	1.44%

Risk & Volatility

Karat Packaging has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, Herc has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500.

Earnings & Valuation

This table compares Karat Packaging and Herc”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Karat Packaging	$467.74 million	2.00	$31.48 million	$2.50	18.78
Herc	$4.38 billion	1.08	$1.00 million	$1.47	95.93

Karat Packaging has higher earnings, but lower revenue than Herc. Karat Packaging is trading at a lower price-to-earnings ratio than Herc, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

25.2% of Karat Packaging shares are owned by institutional investors. Comparatively, 93.1% of Herc shares are owned by institutional investors. 57.9% of Karat Packaging shares are owned by insiders. Comparatively, 2.2% of Herc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Karat Packaging beats Herc on 9 of the 16 factors compared between the two stocks.

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.

About Herc

Herc Holdings Inc., together with its subsidiaries, operates as an equipment rental supplier. It rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment, as well as generators, and safety supplies and expendables; and provides ProSolutions, an industry specific solution based services, such as pumping solutions, power generation, climate control, remediation and restoration, and studio and production equipment. The company also sells used equipment and contractor supplies, such as construction consumables, tools, small equipment, and safety supplies; provides repair, maintenance, equipment management, and safety training services, as well as offers ancillary services, such as equipment transport, rental protection, cleaning, refueling, and labor. It serves non-residential and residential construction, specialty trade, restoration, remediation and environment, and facility maintenance contractors; industrial manufacturing industries, including automotive and aerospace, power, metals and mining, agriculture, pulp, paper and wood, food and beverage, and refineries and petrochemical industries; infrastructure and government sectors; and commercial and retail service, hospitality, healthcare, recreation, entertainment production, and special event management customers through its sales team, industry catalogs, as well as through participation and sponsorship of industry events, trade shows, and Internet. As of December 31, 2017, it operated approximately 275 locations in the United States, Canada, China, the United Kingdom, Saudi Arabia, and Qatar. Herc Holdings Inc. is based in Bonita Springs, Florida.