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Honest Company (HNST)
NASDAQ:HNST
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Honest Company
(NASDAQ:HNST)
Rating:61Neutral
Price Target:
$5.50
▲(8.91%Upside)
Positive Factors
Financial Performance
The company reported results that were ahead of expectations with revenue reaching the highest in company history.
Transformation Success
HNST's transformation is progressing well, helping it deliver outperformance in a difficult CPG environment.
Negative Factors
Business Challenges
HNST acknowledged its own weaker performance in the diapers category in Q4 due to increased competition from newer entrants.
Market Risks
There is macro risk on HNST's higher-priced portfolio and tariff uncertainty.
Honest Company (HNST) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$554.49M
Dividend YieldN/A
Average Volume (3M)2.47M
Price to Earnings (P/E)―
Beta (1Y)1.62
Revenue Growth12.19%
EPS Growth92.40%
CountryUS
Employees164
SectorConsumer Defensive
Sector Strength77
IndustrySpecialty Retail
Share Statistics
EPS (TTM)0.03
Shares Outstanding110,237,060
10 Day Avg. Volume2,102,998
30 Day Avg. Volume2,474,809
Financial Highlights & Ratios
PEG Ratio-5.20
Price to Book (P/B)3.06
Price to Sales (P/S)0.00
P/FCF Ratio-246.55
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue0.33
Enterprise Value/Gross Profit3.27
Enterprise Value/Ebitda-311.42
Forecast
1Y Price Target
$7.10Price Target Upside40.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Honest Company Business Overview & Revenue Model
Company DescriptionThe 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 MoneyThe 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 Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 5.21%|
Next Earnings Date:Aug 08, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth, margin improvements, and positive net income, driven by successful product launches and increased consumer engagement. However, challenges in the diaper portfolio, tariff impacts, and a modest deceleration in sales at the end of Q1 were noted as areas of concern.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
The Honest Company delivered revenue of $97 million, marking a 13% growth year-over-year, driven by strong performance across wipes and baby personal care portfolio.
Gross Margin Expansion
Gross margin increased by 170 basis points to 39%, driven by supply chain cost savings and a mix of higher margin products.
Positive Net Income
The company achieved a positive net income of $3 million, up $5 million from the previous year.
Increased Consumer Engagement
Household penetration increased to 7.3%, with a growth of 55 basis points versus the prior year, and repeat usage grew more than 200 basis points.
Successful Product Launches
The sensitive skin portfolio grew 35% year-over-year, and the wipes portfolio saw consumption growth of over 40%.
Negative Updates
Diaper Portfolio Challenges
The diaper portfolio faced headwinds due to an expected distribution change at a key retailer in Q1, impacting sales.
Tariffs Impact
The company is managing the impact of tariffs, particularly related to imports from China, which could impact gross margins by 1.5 percentage points in 2025.
Modest Deceleration Exiting Q1
The company observed some headwinds and modest deceleration in momentum, notably in the Target channel where consumption was down 4%.
Company Guidance
During The Honest Company's first-quarter 2025 earnings call, the company provided guidance underscoring its solid financial performance and strategic direction. The company reported a revenue of $97 million, reflecting a 13% year-over-year increase, with a gross margin expansion of 170 basis points to 39%. The company also achieved a positive net income of $3 million and an adjusted EBITDA margin of 7%, marking its sixth consecutive quarter of positive adjusted EBITDA. The Honest Company reaffirmed its 2025 financial outlook, projecting net revenue growth of 4% to 6% year-over-year and adjusted EBITDA in the range of $27 million to $30 million. The guidance highlights the company's strategic focus on brand maximization, operating discipline, and margin enhancement to navigate economic headwinds and consumer demand fluctuations. Additionally, the company addressed its efforts in tariff mitigation, projecting a 1.5 percentage point impact on gross margins for 2025, which it plans to offset through cost savings and efficiencies.Honest Company Financial Statement Overview
Summary
Honest Company exhibits revenue growth and strong equity but faces profitability and cash flow challenges. Improved EBITDA margin indicates better cost management, yet persistent net losses and negative free cash flow highlight operational inefficiencies. The solid equity ratio and low debt usage contribute to financial stability, though profitability remains a critical 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.65
Positive
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.72
Positive
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.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 389.37M | 378.34M | 344.37M | 313.65M | 318.64M | 300.52M | Gross Profit |
| 150.44M | 144.66M | 100.53M | 92.31M | 109.17M | 107.90M | EBIT |
| -2.51M | -6.33M | -38.91M | -49.78M | -36.83M | -13.54M | EBITDA |
| 7.71M | 2.96M | -36.15M | -47.03M | -32.68M | -8.69M | Net Income Common Stockholders |
| -1.47M | -6.12M | -39.24M | -49.02M | -38.68M | -14.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 72.82M | 75.44M | 32.83M | 15.17M | 93.18M | 63.68M | Total Assets |
| 265.30M | 247.39M | 201.62M | 240.60M | 272.60M | 240.73M | Total Debt |
| 10.99M | 21.74M | 29.84M | 37.53M | 37.53M | 38.43M | Net Debt |
| -61.83M | -53.70M | -2.98M | 28.01M | -13.26M | 9.17M | Total Liabilities |
| 84.95M | 73.09M | 78.48M | 94.24M | 93.49M | 477.56M | Stockholders Equity |
| 180.36M | 174.31M | 123.14M | 146.36M | 179.11M | -236.82M |
| Cash Flow | Free Cash Flow | ||||
| -2.25M | 1.01M | 17.50M | -77.89M | -38.37M | -12.27M | Operating Cash Flow |
| -1.73M | 1.54M | 19.35M | -76.28M | -38.15M | -12.07M | Investing Cash Flow |
| -516.00K | -530.00K | 3.83M | 34.96M | -8.62M | 36.70M | Financing Cash Flow |
| 41.48M | 41.60M | 122.00K | 38.00K | 60.37M | -973.00K |
Honest Company Technical Analysis
Positive
5.05
Price Trends
4.80
Positive
5.28
Negative
5.23
Negative
Market Momentum
0.05
Positive
52.73
Neutral
41.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HNST, the sentiment is Positive. The current price of 5.05 is above the 20-day moving average (MA) of 5.02, above the 50-day MA of 4.80, and below the 200-day MA of 5.23, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 52.73 is Neutral, neither overbought nor oversold. The STOCH value of 41.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HNST.
Honest Company Risk Analysis
Honest Company disclosed 73 risk factors in its most recent earnings report. Honest Company reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Honest Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $8.91B | 15.03 | 4.70% | 203.30% | 3.50% | -2.63% | |
61 Neutral | $554.49M | ― | -0.96% | ― | 12.19% | 92.40% | |
60 Neutral | $856.11M | ― | -69.51% | ― | -10.55% | 9.27% | |
57 Neutral | $127.18M | ― | -20.57% | ― | 8.09% | 74.06% | |
50 Neutral | $406.94M | ― | -36.88% | ― | 1.38% | 63.65% | |
50 Neutral | $506.28M | ― | -16.81% | ― | -2.11% | -6.49% | |
47 Neutral | $56.76M | 111.79 | 1.44% | 16.23% | -0.62% | 1.15% |
* Consumer Defensive Sector Average
Performance Comparison
HNST
Honest Company
5.05
2.36
87.73%
BNED
Barnes & Noble Education
12.05
11.72
3551.52%
NHTC
Natural Health Trends
4.80
-1.20
-20.00%
YSG
Yatsen Holding
5.74
2.40
71.86%
TDUP
thredUP
7.46
5.53
286.53%
AKA
aka Brands Holding Corp
12.42
-3.71
-23.00%
Honest Company Corporate Events
Executive/Board ChangesShareholder Meetings
Honest Company Holds Annual Stockholders Meeting
Neutral
Jun 3, 2025
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.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Honest Company Appoints New CFO Amid Strong Q1 Results
Positive
May 7, 2025
On May 7, 2025, Honest Company announced the appointment of Curtiss Bruce as the new Chief Financial Officer, effective June 2, 2025, following the retirement of Dave Loretta. This leadership change is expected to support the company’s growth strategy and operational efficiency. Additionally, Honest Company reported a strong financial performance for the first quarter of 2025, with a 13% increase in revenue to $97 million, a net income of $3 million, and an expanded gross margin of 39%. The company reaffirmed its full-year 2025 financial outlook, highlighting its strategic focus on brand maximization, margin enhancement, and operating discipline.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.