Honest Company (HNST) AI Stock Analysis

• Market Cap: $446.19M
• Dividend Yield: N/A
• Average Volume (3M): 3.69M
• Price to Earnings (P/E): 71.3
• Beta (1Y): 1.64
• Revenue Growth: 9.62%
• EPS Growth: N/A
• Country: US
• Employees: 164
• Sector: Consumer Defensive
• Sector Strength: 64
• Industry: Specialty Retail
• EPS (TTM): 0.03
• Shares Outstanding: 111,269,490
• 10 Day Avg. Volume: 5,780,298
• 30 Day Avg. Volume: 3,688,762
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 1.35
• Enterprise Value/Gross Profit: 3.45
• Enterprise Value/Ebitda: 30.30
• 1Y Price Target: $5.85
• Price Target Upside: 48.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 58 Neutral
• Price Target: $4.00 ▲(1.52% Upside)

The Honest Company's overall stock score reflects a mix of strengths and challenges. Strong financial performance and positive earnings call sentiment are offset by technical analysis indicating bearish trends and a high valuation suggesting overvaluation. The company's financial stability and strategic growth initiatives are positive, but consistent profitability and cash flow improvements are needed for a higher score.

Positive Factors

Financial Performance

HNST posted its seventh straight quarter of positive EBITDA and has $72M in net cash on the balance sheet as of quarter end.

Market Position

HNST's US scanner tracked channel data consumption grew 6% in Q2, which is strong relative to its comparative categories.

Revenue and Profit

HNST beat Q2 consensus, with revenue and gross profit exceeding expectations.

Negative Factors

Growth Projections

Analyst lowers price target from $5.50 to $4.25 as Honest’s turnaround continues but at more tempered growth rates in H2.

Market and Competitive Risk

HNST acknowledged its own weaker performance in the diapers category in Q4 due to increased competition from newer entrants.

Pricing and Tariffs

There is macro risk on HNST's higher-priced portfolio and tariff uncertainty.

Honest Company Business Overview & Revenue Model

Company Description

The Honest Company, Inc. manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. The company also offers baby clothing and nursery bedding products. It sells its products through digital and retail sales channels, such as its website and third-party ecommerce sites, as well as brick and mortar retailers. The company was incorporated in 2012 and is headquartered in Los Angeles, California.

How the Company Makes Money

The Honest Company generates revenue through the sale of its consumer products both online and in physical retail locations. Its business model includes direct-to-consumer sales via its website, as well as partnerships with major retailers such as Target, Amazon, and Walmart. The company's key revenue streams are its product lines in diapers and wipes, skin and personal care, and household and wellness items. In addition to these sales channels, Honest Company also capitalizes on its brand appeal and consumer trust in its commitment to safety and sustainability, which helps drive customer loyalty and repeat purchases. The company may also engage in strategic partnerships or collaborations that enhance its market presence and distribution.

Honest Company Financial Statement Overview

Summary

The Honest Company shows revenue growth and a strong equity position with low leverage. However, it struggles with profitability and cash flow generation, as evidenced by negative net profit margin and free cash flow. Improved EBITDA margin indicates better cost management, but consistent net losses remain a concern.

Income Statement

The Honest Company showed a positive revenue growth trend of 2.92% in the TTM (Trailing-Twelve-Months) compared to the previous year. Despite this growth, the company has faced challenges with profitability, as seen in the negative net profit margin and EBIT margin, indicating ongoing operational inefficiencies. However, the improved EBITDA margin in TTM suggests better cost management efforts compared to previous periods.

Balance Sheet

The balance sheet reveals a strong equity position with a high equity ratio of 67.99% in TTM, indicating financial stability and low leverage with a debt-to-equity ratio of 0.06. This suggests the company is using less debt to finance its operations, reducing financial risk. The return on equity remains negative due to the company's net losses, highlighting profitability issues.

Cash Flow

Cash flow analysis shows a concerning decline in free cash flow, which turned negative in TTM, reflecting cash outflows exceeding inflows. The operating cash flow to net income ratio is negative, indicating poor cash generation relative to net income. Despite these challenges, the company has maintained cash reserves, supporting liquidity needs.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	389.78M	378.34M	344.37M	313.65M	318.64M	300.52M
Gross Profit	152.59M	144.66M	100.53M	92.31M	109.17M	107.90M
EBITDA	17.36M	2.96M	-36.15M	-47.03M	-32.68M	-8.69M
Net Income	6.48M	-6.12M	-39.24M	-49.02M	-38.68M	-14.47M
Balance Sheet
Total Assets	249.03M	247.39M	201.62M	240.60M	272.60M	240.73M
Cash, Cash Equivalents and Short-Term Investments	72.08M	75.44M	32.83M	15.17M	93.18M	63.68M
Total Debt	17.51M	21.74M	29.84M	37.53M	37.53M	38.43M
Total Liabilities	62.00M	73.09M	78.48M	94.24M	93.49M	477.56M
Stockholders Equity	187.03M	174.31M	123.14M	146.36M	179.11M	-236.82M
Cash Flow
Free Cash Flow	-6.00M	1.01M	17.50M	-77.89M	-38.37M	-12.27M
Operating Cash Flow	-5.42M	1.54M	19.35M	-76.28M	-38.15M	-12.07M
Investing Cash Flow	-582.00K	-530.00K	3.83M	34.96M	-8.62M	36.70M
Financing Cash Flow	41.49M	41.60M	122.00K	38.00K	60.37M	-973.00K

Honest Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.94
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HNST, the sentiment is Negative. The current price of 3.94 is below the 20-day moving average (MA) of 4.46, below the 50-day MA of 4.67, and below the 200-day MA of 5.42, indicating a bearish trend. The MACD of -0.21 indicates Positive momentum. The RSI at 36.22 is Neutral, neither overbought nor oversold. The STOCH value of 37.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HNST.

Honest Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	63 Neutral	$20.98B	14.59	-8.07%	3.13%	2.83%	-9.85%
TDUP	60 Neutral	$1.29B	―	-58.93%	―	-10.39%	14.92%
HNST	58 Neutral	$446.19M	71.26	4.09%	―	9.62%	―
YSG	54 Neutral	$876.08M	―	-16.81%	―	0.23%	26.92%
BNED	50 Neutral	$293.20M	―	-36.88%	―	1.38%	63.65%
AKA	49 Neutral	$117.88M	―	-21.36%	―	7.67%	71.96%
NHTC	48 Neutral	$51.12M	146.53	1.05%	18.35%	-2.07%	-61.05%

Honest Company Corporate Events

Honest Company Holds Annual Stockholders Meeting

On May 28, 2025, The Honest Company, Inc. held its annual meeting of stockholders where two key proposals were voted upon. The stockholders elected three Class I directors to serve until the 2028 annual meeting and ratified the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

The most recent analyst rating on (HNST) stock is a Hold with a $4.00 price target. To see the full list of analyst forecasts on Honest Company stock, see the HNST Stock Forecast page.