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Honest Company
(NASDAQ:HNST)
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Rating:69Neutral
Price Target:
$5.50
▼(-3.85% Downside)
Action:Reiterated
Date:08/06/26
The score is driven primarily by improving fundamentals (strong cash generation and low leverage) and a positive earnings call with raised guidance and margin progress. Offsetting these positives are still-challenged trailing profitability (negative P/E and income statement weakness) and only moderate technical momentum.
Positive Factors
Category Growth
Strong consumption growth in wipes and personal care indicates improving product-market fit and brand demand in the company’s priority categories. These higher-growth platforms now support a more favorable portfolio mix, which can strengthen revenue quality and earnings potential over the next several quarters.
Negative Factors
Diaper Headwinds
Persistent weakness in the diaper category creates a durable constraint on consolidated growth because diapers remain an important part of the portfolio. The shift toward wipes and personal care can reduce this exposure, but it will take continued execution for faster categories to fully offset the decline.
Read all positive and negative factors
Positive Factors
Negative Factors
Category Growth
Strong consumption growth in wipes and personal care indicates improving product-market fit and brand demand in the company’s priority categories. These higher-growth platforms now support a more favorable portfolio mix, which can strengthen revenue quality and earnings potential over the next several quarters.
Read all positive factors
Honest Company (HNST) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$514.97M
Dividend YieldN/A
Average Volume (3M)1.59M
Price to Earnings (P/E)―
Beta (1Y)1.79
Revenue Growth-12.26%
EPS Growth-282.39%
CountryUS
Employees174
SectorConsumer Defensive
Sector Strength42
IndustryHousehold & Personal Products
Share Statistics
EPS (TTM)-0.10
Shares Outstanding107,284,380
10 Day Avg. Volume1,569,485
30 Day Avg. Volume1,594,000
Financial Highlights & Ratios
PEG Ratio-0.14
Price to Book (P/B)1.69
Price to Sales (P/S)0.77
P/FCF Ratio21.08
Enterprise Value/Market Cap0.62
Enterprise Value/Revenue0.93
Enterprise Value/Gross Profit2.60
Enterprise Value/Ebitda-171.39
Forecast
1Y Price Target
$5.20Price Target Upside-9.09% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)0.12
Revenue Forecast (FY)$322.57M
Honest Company Business Overview & Revenue Model
Company Description
The Honest Company, Inc. offers a wide range of consumer products, encompassing baby necessities such as diapers and wipes, various personal care and beauty items, and household and health-focused goods. Their product line also includes apparel fo...
How the Company Makes Money
The Honest Company makes money by selling branded consumer packaged goods. Its revenue is generated primarily from product sales across major categories including diapers and wipes, personal care (e.g., skin, bath, and body), and household and wel...
Honest Company Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 05, 2026
Earnings Call Sentiment Positive
The call conveyed a largely positive outlook driven by strong organic revenue (+6.7%), robust consumption growth (~8%), outsized performance in wipes (+26%) and personal care (+19%), improved underlying margins (underlying adjusted gross margin ~43.8% and underlying adjusted EBITDA margin 9.8%), solid cash and free cash flow generation, and a raised full-year guidance. Key risks and negatives cited include a reported revenue decline (-10.9%) driven by structural headwinds in the diaper category, and that some near-term margin/revenue benefits were aided by non-recurring items (tariff refund and apparel liquidation). Management plans to reinvest one-time benefits into marketing and capabilities to drive household penetration, which implies near-term spend increases. On balance, the positives — especially strong category outperformance, margin improvement, cash generation and raised guidance — outweigh the lowlights.Positive Updates
Organic Revenue Growth
Organic revenue increased 6.7% in Q2, reflecting strength in higher-growth, higher-margin platforms (wipes and personal care).
Negative Updates
Reported Revenue Decline
Reported Q2 revenue was $83.3M, down 10.9% year-over-year, due primarily to declines in the diaper business and the impact of strategic powering Honest growth actions.
Read all updates
Q2-2026 Updates
Positive
Negative
Organic Revenue Growth
Organic revenue increased 6.7% in Q2, reflecting strength in higher-growth, higher-margin platforms (wipes and personal care).
Read all positive updates
Company Guidance
The company raised its 2026 outlook to reported revenue of $319–$325 million (including ~ $10 million of apparel inventory liquidation revenue), guided organic revenue growth of 5%–7% (up from 4%–6%), expects adjusted gross margin in the mid‑40s (up from the low‑40s) and adjusted EBITDA of $23–$25 million (up from $20–$23 million); management noted the adjusted gross margin guidance reflects both a ~$6.6 million tariff refund and apparel liquidation impacts while underlying Q2 adjusted gross margin was ~43.8% (Q2 reported/adjusted gross margin 48.4%/50.1% including one‑time items) and underlying adjusted EBITDA margin was 9.8% (Q2 adjusted EBITDA $14.5M, adjusted EBITDA margin 17.3%), year‑to‑date free cash flow was $35.3 million, cash ended the quarter at $105.9 million with zero debt, and the new apparel licensing agreement is expected to be immaterial to 2026 results (share repurchases year‑to‑date: 5.6M shares for $18.7M, $6.3M remaining authorization).Honest Company Financial Statement Overview
Summary
Income Statement
46
Neutral
Balance Sheet
78
Positive
Cash Flow
82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 342.01M | 371.32M | 378.34M | 344.37M | 313.65M | 318.64M |
| Gross Profit | 121.96M | 123.75M | 144.66M | 100.53M | 92.31M | 109.17M |
| EBITDA | -1.85M | -2.95M | 3.24M | -29.90M | -39.98M | -32.70M |
| Net Income | -12.17M | -15.69M | -6.12M | -39.24M | -49.02M | -38.68M |
Balance Sheet | ||||||
| Total Assets | 220.12M | 225.41M | 247.39M | 201.62M | 240.60M | 272.60M |
| Cash, Cash Equivalents and Short-Term Investments | 105.90M | 89.58M | 75.44M | 32.83M | 15.17M | 93.18M |
| Total Debt | 9.51M | 13.96M | 21.74M | 29.84M | 37.53M | 37.53M |
| Total Liabilities | 53.10M | 55.74M | 73.09M | 78.48M | 94.24M | 93.49M |
| Stockholders Equity | 167.02M | 169.67M | 174.31M | 123.14M | 146.36M | 179.11M |
Cash Flow | ||||||
| Free Cash Flow | 52.71M | 13.61M | 1.01M | 17.50M | -77.89M | -38.37M |
| Operating Cash Flow | 56.57M | 15.12M | 1.54M | 19.35M | -76.28M | -38.15M |
| Investing Cash Flow | -3.87M | -1.51M | -530.00K | 3.83M | 34.96M | -8.62M |
| Financing Cash Flow | -18.89M | 535.00K | 41.60M | 122.00K | 38.00K | 60.37M |
Honest Company Technical Analysis
Neutral
5.72
Price Trends
5.25
Negative
4.57
Positive
3.73
Positive
Market Momentum
-0.09
Positive
37.76
Neutral
18.07
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HNST, the sentiment is Neutral. The current price of 5.72 is above the 20-day moving average (MA) of 5.05, above the 50-day MA of 5.25, and above the 200-day MA of 3.73, indicating a neutral trend. The MACD of -0.09 indicates Positive momentum. The RSI at 37.76 is Neutral, neither overbought nor oversold. The STOCH value of 18.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $373.21B | 23.85 | 29.55% | 2.68% | 3.52% | -3.74% | |
69 Neutral | $514.97M | -46.33 | -6.99% | ― | -12.26% | -282.39% | |
66 Neutral | $36.63B | 18.73 | 122.57% | 4.63% | -12.19% | -19.22% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
57 Neutral | $10.45B | 17.93 | -1893.55% | 5.75% | -5.41% | -26.46% | |
57 Neutral | $37.59B | 22.49 | 15.58% | 5.33% | 1.75% | 16.81% | |
48 Neutral | $44.84M | -5.42 | -83.49% | ― | -14.25% | 66.08% |
* Consumer Defensive Sector Average
HNST
Honest Company
4.80
1.13
30.79%
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GROV
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1.05
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KVUE
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.