Karooooo Ltd. (KARO) closed the last trading session at $47.92, gaining 6.2% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $60.25 indicates a 25.7% upside potential.The average comprises four short-term price targets ranging from a low of $60.00 to a high of $61.00, with a standard deviation of $0.5. While the lowest estimate indicates an increase of 25.2% from the current price ...

Core Insights - Cartrack has partnered with Schmitz Cargobull to enhance its mobility solutions by integrating TrailerConnect® telematics data into its platform, providing transport operators with real-time visibility and control over fleet operations [1] Company Overview - Cartrack is a leading global mobility solutions provider and a subsidiary of Karooooo Limited, listed on NASDAQ under the ticker KARO [1] - Schmitz Cargobull is recognized as Europe's premier manufacturer of semi-trailers and is noted for its innovations in digital trailer connectivity [1]

SINGAPORE--(BUSINESS WIRE)--Karooooo Ltd. (NASDAQ: KARO), the global provider of mobility and operational intelligence solutions and parent company of Cartrack, today announced that it earned a place on Singapore's Fastest-Growing Companies 2026, an annual ranking compiled by global research firm Statista, in collaboration with The Straits Times, Singapore's leading newspaper. The list recognises 100 companies headquartered in Singapore that have achieved strong revenue growth over the past thr. ...

Core Viewpoint - The article highlights Karooooo Ltd. (KARO) as a promising growth stock, supported by its strong growth metrics and favorable Zacks Rank, making it an attractive option for growth investors [2][9]. Earnings Growth - Karooooo has a historical EPS growth rate of 15.1%, with projected EPS growth of 26.1% for the current year, surpassing the industry average of 24.1% [4]. Asset Utilization Ratio - The company has an asset utilization ratio (sales-to-total-assets ratio) of 1.02, indicating it generates $1.02 in sales for every dollar in assets, significantly higher than the industry average of 0.59 [5]. Sales Growth - Karooooo's sales are expected to grow by 32.8% this year, compared to the industry average of 13%, showcasing its strong sales growth potential [6]. Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Karooooo, with the Zacks Consensus Estimate for the current year increasing by 7% over the past month [7]. Overall Positioning - With a Growth Score of A and a Zacks Rank of 2, Karooooo is well-positioned for outperformance, making it a compelling choice for growth investors [9].

Core Viewpoint - Investors are encouraged to consider Karooooo Ltd. (KARO) due to solid improvements in earnings estimates and positive short-term price momentum [1] Earnings Estimates - Analysts have shown growing optimism regarding Karooooo's earnings prospects, leading to a rising trend in estimate revisions, which is expected to positively impact the stock price [2] - The consensus earnings estimate for the current quarter is $0.52 per share, reflecting an 18.2% year-over-year increase, with a 6.12% rise in the Zacks Consensus Estimate over the last 30 days [5] - For the full year, the expected earnings per share is $2.06, indicating a 26.4% increase from the previous year, with similar positive revisions noted [6] Zacks Rank - Karooooo has achieved a Zacks Rank 2 (Buy), indicating favorable estimate revisions that suggest strong potential for outperformance compared to the S&P 500 [7] - Historically, Zacks 1 (Strong Buy) and 2 (Buy) ranked stocks have significantly outperformed the S&P 500, with Zacks 1 stocks averaging a +25% annual return since 2008 [3][7] Stock Performance - Over the past four weeks, Karooooo shares have increased by 5.2%, indicating investor confidence in the company's earnings growth prospects [8]

Core Viewpoint - Karooooo Ltd. (KARO) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on an upward trend in earnings estimates, which significantly influences stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The rising earnings estimates and the Zacks rating upgrade suggest an improvement in Karooooo's underlying business, which could lead to higher stock prices as investors respond positively [4]. Importance of Earnings Estimate Revisions - Research indicates a strong correlation between earnings estimate revisions and stock movements, making it beneficial for investors to track these revisions for investment decisions [5]. - The Zacks Rank system effectively leverages earnings estimate revisions to classify stocks, enhancing its utility for investors [6]. Specific Earnings Estimates for Karooooo - For the fiscal year ending February 2026, Karooooo is expected to earn $1.87 per share, with a 7.8% increase in the Zacks Consensus Estimate over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of ratings, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [8][9]. - Karooooo's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [9].

Group 1 - Pearl Gray is a proprietary investment fund and independent market research firm focusing on Fixed-Income and Capital Flows [1] - The firm also provides analysis on equity REITs, Investment Fund Appraisal, and Bank Risk Analysis for its Seeking Alpha readers [1] Group 2 - The content published by Pearl Gray is independent analysis and does not constitute financial advice [1][3] - Readers are encouraged to consult a registered financial advisor before making investment decisions [3]

Core Insights - Karooooo reported strong third-quarter fiscal 2026 results, highlighting accelerating annual recurring revenue (ARR) growth, record subscriber additions, and continued profitability despite increased sales and marketing spending [4][6][7] Financial Performance - Total revenue for the quarter was ZAR 1,410 million, up 22%, with subscription revenue at ZAR 1,239 million, up 20% [1] - Operating profit increased 14% to ZAR 369 million, and earnings per share rose 11% to ZAR 8.55 [1] - Adjusted free cash flow increased 28% to ZAR 239 million, with year-to-date adjusted free cash flow up 37% to ZAR 597 million [7] Subscriber Growth - Total subscribers increased 16% to approximately 2.6 million, with a record net addition of about 111,000 during the quarter [2][6] - Commercial customer ARR retention remained at 95%, with subscription revenue representing 97% of contract revenue [1] ARR Growth - ARR increased 22% year over year to ZAR 5,106 million, and on a U.S. dollar basis, it rose 28% to $298 million [3][6] - This marked the fourth consecutive quarter of ARR growth acceleration [3] Segment Performance - Cartrack, the company's SaaS operations management platform, was the primary driver of growth, with revenue increasing 21% to ZAR 1,275 million [9] - Karooooo Logistics reported delivery-as-a-service revenue of ZAR 135 million, up 24%, with an operating profit margin of 7% [12] Regional Trends - In South Africa, subscription revenue growth accelerated to 21%, accounting for 72% of total Cartrack subscription revenue [13] - Average revenue per user (ARPU) in South Africa increased 7% to 162 ZAR [14] - In Europe, subscribers increased 16% to about 223,000, with subscription revenue rising 24% [15] Outlook - Management raised its fiscal 2026 Cartrack subscription revenue outlook to ZAR 4,785 million to ZAR 4,900 million, implying growth of 18% to 21% [16] - The company cautioned that the appreciation of the South African rand has created a currency translation headwind [17]

Financial Data and Key Metrics Changes - In Q3 FY 2026, Karooooo's ARR increased by 22% to ZAR 5,106 million, and on a U.S. dollar basis, it increased by 28% to $298 million [4][20] - Total revenue for Q3 increased by 22% to ZAR 1,410 million, with subscription revenue rising by 20% to ZAR 1,239 million [7][19] - Operating profit increased by 14% to ZAR 369 million, and earnings per share rose by 11% to ZAR 8.55 [19][24] Business Line Data and Key Metrics Changes - Cartrack's subscription revenue grew by 20% to ZAR 1,236 million, accounting for 97% of its total revenue [20][21] - Karooooo Logistics' revenue reached ZAR 135 million, an increase of 24% [15][20] - Cartrack's operating profit margin was 28%, while Karooooo Logistics had a 7% operating profit margin [7][15] Market Data and Key Metrics Changes - South Africa represented 72% of total Cartrack subscription revenue, with a subscription revenue growth of 21% [11][12] - Southeast Asia and the Middle East saw a 14% increase in subscription revenue, while Europe experienced a 24% increase [13][14][22] - The total subscriber count increased by 16% to approximately 2.6 million, with record net additions of 111,000 in Q3 [10][21] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa by increasing the adoption of video solutions and Cartrack Tag among existing customers [16][27] - Karooooo is focused on expanding its distribution capabilities in Asia and Europe, with a strong emphasis on capital allocation for organic growth and innovation [17][28] - The company is committed to maintaining strong unit economics and profitability while pursuing growth opportunities in under-penetrated markets [4][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity in South Africa, highlighting a long runway for subscription growth [12][13] - The company noted that the appreciation of the South African rand has created a currency translation headwind on reported revenue, but underlying operating momentum remains strong [25][26] - Management remains focused on long-term growth and shareholder value, prioritizing investments in sales capacity and customer acquisition [17][28] Other Important Information - The company reported a net cash position of ZAR 531 million and maintained healthy debtor collection days at 31 days [24] - Karooooo's LTV to CAC ratio remains above nine times, indicating strong retention and efficient distribution [5][11] - The company plans to return surplus capital to shareholders through dividends when growth opportunities are not available [17] Q&A Session Summary Question: How is the headcount increase in Asia progressing? - The company is currently at around 40% of the targeted 70% increase, with many hires expected in January and February [30] Question: When will the investment in sales and marketing stabilize? - The stabilization will depend on the efficiency of sales and marketing strategies, with plans to continue increasing investment given the large addressable market [31] Question: How far along is the cross-selling of Tag and video in South Africa? - The company is in the early stages of cross-selling and expects stronger momentum in the next financial year [32] Question: What drove the strong pickup in South Africa subscriber growth? - Subscriber growth is in accordance with the plan, driven by increased footprint and execution capabilities [36] Question: How does the Volkswagen OEM integration impact European growth? - The integration allows for quicker vehicle onboarding to the platform, although operational issues with OEM telemetry devices remain [40]

Financial Data and Key Metrics Changes - In Q3 FY 2026, Karooooo's ARR increased by 22% to ZAR 5,106 million, and in U.S. dollars, it increased by 28% to $298 million [4][20] - Total revenue for Q3 increased by 22% to ZAR 1,410 million, with subscription revenue rising by 20% to ZAR 1,239 million [7][19] - Operating profit increased by 14% to ZAR 369 million, and earnings per share rose by 11% to ZAR 8.55 [19][22] Business Line Data and Key Metrics Changes - Cartrack's subscription revenue grew by 20% to ZAR 1,236 million, comprising 97% of its total revenue [20][22] - Karooooo Logistics' revenue reached ZAR 135 million, an increase of 24%, with a 7% operating profit margin [15][20] - Cartrack's operating profit margin was 28% in Q3, reflecting strong financial performance [6][8] Market Data and Key Metrics Changes - South Africa represented 72% of total Cartrack subscription revenue, with a growth rate of 21% in Q3 [11][12] - Southeast Asia and the Middle East saw a 14% increase in subscription revenue, while Europe experienced a 24% growth [13][14][22] - The total subscriber base increased by 16% to approximately 2.6 million, with record net additions of 111,000 in Q3 [10][21] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa by increasing the adoption of video solutions and Cartrack Tag among existing customers [16][27] - Karooooo is focused on expanding its distribution capabilities in Asia and Europe, with a strong emphasis on capitalizing on the growing demand for video capabilities, including AI video [16][28] - The capital allocation framework prioritizes organic growth and innovation, with a commitment to returning surplus capital to shareholders when growth opportunities are limited [17][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity in South Africa, indicating a long runway for subscription growth [12][27] - The company noted that the appreciation of the South African rand has created a currency translation headwind on reported revenue, but underlying operating momentum remains strong [25][26] - Management remains focused on long-term growth, emphasizing the importance of customer retention and service over strict adherence to contract terms [43][50] Other Important Information - The company reported a strong balance sheet with net cash and cash equivalents of ZAR 531 million [10][24] - Year-to-date adjusted free cash flow increased by 37% to ZAR 597 million, reflecting the strength of the operating model [23][24] Q&A Session Summary Question: How are we doing with the 70% increase in headcount in Asia? - The company is currently at around 40% and expects to reach the target by the end of Q4 as many hires are planned for January and February [30] Question: When will our investment in sales and marketing stabilize? - The stabilization will depend on the efficiency of sales and marketing strategies, which will continue to be increased given the large addressable market [31] Question: How far along are we in the cross-selling tag and video cycle in South Africa? - The company is in the early stages and anticipates stronger momentum in the next financial year [32] Question: How do you see market demand today relative to sales execution in key markets? - Sales and marketing have been substantially increased this year, and the company is seeing strong productivity in key markets [33] Question: Can you address adoption trends for AI camera penetration rates per region? - Adoption is strong in South Africa, but the company believes it is still early days for broader adoption [34] Question: Is the market saturated for Carelli in Europe or Southeast Asia? - The company believes it is early days in the e-commerce space and does not consider the market saturated [35] Question: How has the shift from used vehicle sales to new vehicle sales in South Africa impacted subscriptions? - The impact is considered insignificant as customer acquisition is based on existing vehicles [37] Question: How do you think about growth versus margin trade-off? - The company focuses on long-term value for shareholders, viewing upfront costs as temporary and necessary for future revenue [38] Question: What are the drivers for subscription ARPU growth in South Africa? - Continuous improvements in technology and service have been key drivers, with no significant changes in strategy [49]