Honest Company (HNST) AI Stock Analysis

• Market Cap: $370.53M
• Dividend Yield: N/A
• Average Volume (3M): 3.75M
• Price to Earnings (P/E): 58.7
• Beta (1Y): 1.62
• Revenue Growth: 9.62%
• EPS Growth: N/A
• Country: US
• Employees: 164
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Specialty Retail
• EPS (TTM): 0.01
• Shares Outstanding: 111,269,490
• 10 Day Avg. Volume: 3,223,504
• 30 Day Avg. Volume: 3,750,282
• PEG Ratio: 1.33
• Price to Book (P/B): 3.99
• Price to Sales (P/S): 1.84
• P/FCF Ratio: 687.14
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $4.04
• Price Target Upside: 73.39% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 52 Neutral
• Price Target: $2.50 ▲(7.30% Upside)

The Honest Company's stock score is primarily impacted by its financial performance and earnings call. While there is revenue growth and improved profitability, challenges in consistent profitability and cash flow remain. Technical indicators suggest bearish momentum, and the stock appears overvalued. The earnings call highlighted strategic shifts but also noted revenue declines and lowered guidance.

Positive Factors

Strong Balance Sheet

A low debt-to-equity ratio indicates financial stability and low leverage, providing the company with flexibility to invest in growth opportunities.

Growth in Wipes Segment

Significant growth in the wipes segment suggests strong market demand and competitive positioning, supporting long-term revenue potential.

Transformation 2.0 Strategy

The strategic focus on high-performing categories and cost savings initiatives can enhance profitability and streamline operations over the long term.

Negative Factors

Revenue Decline

A decline in revenue indicates challenges in maintaining sales momentum, which could impact future growth and market share.

Challenges in Diaper Category

Significant declines in the diaper category highlight competitive pressures and potential loss of market share, affecting overall business performance.

Lowered Full-Year Guidance

Reduced financial guidance reflects anticipated challenges and uncertainties, potentially impacting investor confidence and strategic execution.

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 primarily through the sale of its products across various channels, including direct-to-consumer e-commerce, retail partnerships, and wholesale distribution. Key revenue streams include the sale of baby care products, personal care items, and household cleaning products. The company has established partnerships with major retailers such as Target and Amazon, enhancing its market reach and visibility. Additionally, Honest Company leverages subscription services for consumers who prefer regular deliveries of its products, which provides a stable source of recurring revenue. The brand's commitment to transparency and sustainability has attracted a loyal customer base, contributing to its overall earnings.

Honest Company Financial Statement Overview

Summary

The Honest Company shows positive revenue growth and improved profitability metrics, but faces challenges in achieving consistent profitability and positive operating cash flow. The balance sheet is strong with low leverage, providing financial stability.

Income Statement

The Honest Company has shown a positive trend in revenue growth, with a TTM growth rate of 10.5%. Gross profit margin improved to 39.15% in the TTM, indicating better cost management. However, the net profit margin remains low at 1.66%, suggesting limited profitability. The EBIT and EBITDA margins have improved but are still modest, reflecting ongoing operational challenges.

Balance Sheet

The company's debt-to-equity ratio has decreased to 0.094 in the TTM, indicating a strong balance sheet with low leverage. Return on equity has turned positive at 3.84%, showing improved profitability. The equity ratio is healthy, suggesting financial stability. Overall, the balance sheet reflects a solid financial position with manageable debt levels.

Cash Flow

Cash flow performance is mixed, with negative operating cash flow in the TTM. However, free cash flow has improved significantly, showing a growth rate of 167%. The free cash flow to net income ratio is strong at 1.11, indicating efficient cash generation relative to net income. Despite improvements, negative operating cash flow remains a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	383.12M	378.34M	344.37M	313.65M	318.64M	300.52M
Gross Profit	148.68M	144.66M	100.53M	92.31M	109.17M	107.90M
EBITDA	17.61M	2.96M	-36.15M	-47.03M	-32.68M	-8.69M
Net Income	7.07M	-6.12M	-39.24M	-49.02M	-38.68M	-14.47M
Balance Sheet
Total Assets	241.54M	247.39M	201.62M	240.60M	272.60M	240.73M
Cash, Cash Equivalents and Short-Term Investments	71.45M	75.44M	32.83M	15.17M	93.18M	63.68M
Total Debt	6.48M	21.74M	29.84M	37.53M	37.53M	38.43M
Total Liabilities	51.35M	73.09M	78.48M	94.24M	93.49M	477.56M
Stockholders Equity	190.19M	174.31M	123.14M	146.36M	179.11M	-236.82M
Cash Flow
Free Cash Flow	-21.62M	1.01M	17.50M	-77.89M	-38.37M	-12.27M
Operating Cash Flow	-21.01M	1.54M	19.35M	-76.28M	-38.15M	-12.07M
Investing Cash Flow	-609.00K	-530.00K	3.83M	34.96M	-8.62M	36.70M
Financing Cash Flow	39.63M	41.60M	122.00K	38.00K	60.37M	-973.00K

Honest Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.33
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 2.33 is below the 20-day moving average (MA) of 3.50, below the 50-day MA of 3.73, and below the 200-day MA of 4.63, indicating a bearish trend. The MACD of -0.21 indicates Positive momentum. The RSI at 14.35 is Positive, neither overbought nor oversold. The STOCH value of 9.90 is Positive, 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
BWMX	73 Outperform	$520.94M	9.95	79.76%	8.41%	-7.03%	1.04%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
LE	60 Neutral	$452.56M	86.27	2.66%	―	-8.78%	―
HNST	52 Neutral	$370.53M	58.72	4.09%	―	9.62%	―
BNED	50 Neutral	$300.35M	―	―	―	1.38%	63.65%
BARK	50 Neutral	$136.28M	―	-26.91%	―	-3.08%	14.42%
FLWS	39 Underperform	$215.83M	-0.98	-67.22%	―	-8.07%	-2206.16%

Honest Company Corporate Events

Honest Company Earnings Call: Mixed Sentiment Amid Strategic Shifts

The recent earnings call for Honest Company, Inc. revealed a mixed sentiment among stakeholders. While the company celebrated strong performances in its wipes and personal care categories, challenges in the diaper segment and a decline in overall revenue tempered the enthusiasm. The company’s strategic focus through Transformation 2.0 was also a focal point, reflecting a commitment to core areas despite the hurdles faced.

The Honest Company Reports Q3 2025 Earnings and Strategic Shift

The Honest Company, Inc., a personal care company known for its cleanly-formulated and sustainably-designed products, operates in the consumer goods sector, focusing on categories such as diapers, wipes, and personal care items. In its third-quarter earnings report for 2025, the company announced a quarterly revenue of $93 million and a net income of $1 million, marking a positive shift in profitability. Despite a 6.7% decrease in revenue compared to the previous year, the company maintained its eighth consecutive quarter of positive Adjusted EBITDA, albeit at a reduced figure of $4 million.

Honest Company Launches Strategic Transformation Initiative

On November 5, 2025, The Honest Company announced the launch of its Transformation 2.0: Powering Honest Growth, a strategic initiative aimed at enhancing simplicity, focus, and profitability. The plan involves exiting lower margin, non-strategic categories and channels, such as Honest.com fulfillment and apparel, and retail and online stores in Canada. The company expects restructuring costs between $25 million to $35 million by the first quarter of 2027, with anticipated annualized benefits of $8 million to $15 million starting in 2026. The initiative is expected to streamline operations and strengthen the company’s market position.

The most recent analyst rating on (HNST) stock is a Hold with a $6.00 price target. To see the full list of analyst forecasts on Honest Company stock, see the HNST Stock Forecast page.

Honest Company Shines in Earnings Call with Record Margins

The Honest Company’s recent earnings call painted a picture of robust financial health, underscored by record gross margins and a positive net income, driven by successful product launches and digital retail expansion. Despite facing challenges like a decline in the diaper business and tariff impacts, the overall sentiment was optimistic, with positive aspects outweighing the negatives.

The Honest Company Achieves Profit Growth in Q2 2025

The Honest Company, Inc., a personal care company known for its cleanly-formulated and sustainably-designed products, operates in the personal care sector, offering a range of products including diapers, wipes, and beauty items.