Head to Head Contrast: Karat Packaging (NASDAQ:KRT) vs. Transcontinental (OTCMKTS:TCLCF)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Karat Packaging	8.00%	22.54%	13.21%
Transcontinental	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent recommendations for Karat Packaging and Transcontinental, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karat Packaging	0	0	3	0	3.00
Transcontinental	0	0	0	0	N/A

Karat Packaging currently has a consensus target price of $30.33, indicating a potential upside of 12.14%. Given Karat Packaging’s higher possible upside, equities analysts plainly believe Karat Packaging is more favorable than Transcontinental.

Insider & Institutional Ownership

25.2% of Karat Packaging shares are held by institutional investors. Comparatively, 0.0% of Transcontinental shares are held by institutional investors. 71.5% of Karat Packaging shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Karat Packaging and Transcontinental’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Karat Packaging	$405.65 million	1.33	$32.47 million	$1.62	16.70
Transcontinental	N/A	N/A	N/A	$1.34	7.53

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

Dividends

Karat Packaging pays an annual dividend of $1.20 per share and has a dividend yield of 4.4%. Transcontinental pays an annual dividend of $0.63 per share and has a dividend yield of 6.2%. Karat Packaging pays out 74.1% of its earnings in the form of a dividend. Transcontinental pays out 46.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Karat Packaging has increased its dividend for 1 consecutive years. Transcontinental is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Karat Packaging beats Transcontinental on 11 of the 13 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 Transcontinental

Transcontinental Inc. engages in the flexible packaging business in Canada, the United States, Latin America, the United Kingdom, Australia, and New Zealand. It operates through Packaging, Printing, and Media sectors. The Packaging sector engages in the extrusion, lamination, printing, and converting packaging solutions; and manufacturing and recycling flexible plastic, including rollstock, bags and pouches, coextruded films, shrink films and bags, and advanced coatings. This sector serves agriculture, beverage, cheese and dairy, coffee and tea, frozen, health and wellness, home and personal care, industrial, lawn and garden, meat and protein, pet food, snacks, confection and dairy foods, tobacco, music, and entertainment markets, as well as supermarkets. The Printing sector provides integrated services for retailers, such as premedia services, flyer and in-store marketing product printing, and door-to-door distribution, as well as print solutions for newspapers, magazines, 4-color books, and personalized and mass marketing products. The Media sector is involved in printing and digital publishing of educational and trade books, and specialized publications for professionals and newspapers in French and English. Transcontinental Inc. was founded in 1976 and is headquartered in Montreal, Canada.