Honest (NASDAQ:HNST) Releases Earnings Results, Beats Estimates By $0.08 EPS

Honest (NASDAQ:HNST) released its earnings results on Wednesday. The company reported $0.09 earnings per share for the quarter, beating analysts’ consensus estimates of $0.01 by $0.08, FiscalAI reports. The company had revenue of $80.19 million for the quarter, compared to analysts’ expectations of $77.83 million. Honest had a negative net margin of 5.39% and a positive return on equity of 3.52%.

Here are the key takeaways from Honest’s conference call:

• Organic growth and margins strengthened: Q2 organic revenue rose 6.7% and consumption increased nearly 8%, led by wipes and personal care. Underlying adjusted gross margin expanded to 43.8%, while underlying adjusted EBITDA margin reached a company-record 9.8%.
• Wipes and personal care continued to outperform: Wipes consumption grew 26% and personal care grew 19%, substantially ahead of their respective categories. Household penetration increased 100 basis points to 8.1%, with nearly two-thirds of the gain coming from households without children.
• Full-year outlook was raised: Honest now expects 2026 organic revenue growth of 5%-7%, adjusted EBITDA of $23 million-$25 million, and adjusted gross margins in the mid-40% range. The company plans to reinvest tariff-refund proceeds into marketing, operating capabilities, and growth initiatives.
• Balance sheet and cash generation improved: The company ended the quarter with $105.9 million in cash, no debt, and $35.3 million of year-to-date free cash flow, compared with negative free cash flow in the prior-year period. It also repurchased 5.6 million shares for $18.7 million year to date.
• Diaper-category pressure remains a headwind: Reported revenue declined 10.9% to $83.3 million, reflecting strategic exits and diaper revenue declines. Management characterized weakness across the diaper category as structural and said increased second-half marketing and capability investments will raise SG&A from Q2 levels.

Honest Price Performance

Shares of NASDAQ HNST traded down $0.04 during mid-day trading on Wednesday, hitting $3.85. 1,322,633 shares of the company’s stock traded hands, compared to its average volume of 1,163,709. Honest has a 1 year low of $2.07 and a 1 year high of $4.68. The company’s 50-day moving average is $3.70 and its two-hundred day moving average is $3.15. The company has a market capitalization of $423.81 million, a P/E ratio of -22.65 and a beta of 2.12.

Wall Street Analysts Forecast Growth

A number of equities research analysts have issued reports on HNST shares. Wall Street Zen raised shares of Honest from a “sell” rating to a “hold” rating in a report on Saturday, May 9th. Telsey Advisory Group reissued a “market perform” rating and issued a $4.00 target price on shares of Honest in a report on Thursday, May 7th. Weiss Ratings restated a “sell (d-)” rating on shares of Honest in a research report on Tuesday, May 26th. Alliance Global Partners reaffirmed a “buy” rating on shares of Honest in a research note on Thursday, May 7th. Finally, Morgan Stanley set a $3.40 price target on shares of Honest in a report on Thursday, May 7th. Two analysts have rated the stock with a Buy rating, four have given a Hold rating and two have issued a Sell rating to the company’s stock. Based on data from MarketBeat, Honest has an average rating of “Hold” and an average price target of $3.47.

Insider Buying and Selling

In other news, General Counsel Brendan Sheehey sold 9,784 shares of the firm’s stock in a transaction that occurred on Wednesday, May 20th. The stock was sold at an average price of $3.14, for a total value of $30,721.76. Following the completion of the sale, the general counsel directly owned 715,888 shares of the company’s stock, valued at $2,247,888.32. This trade represents a 1.35% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Carla Vernon sold 119,389 shares of Honest stock in a transaction that occurred on Wednesday, May 20th. The stock was sold at an average price of $3.14, for a total value of $374,881.46. Following the completion of the transaction, the chief executive officer owned 3,946,451 shares of the company’s stock, valued at approximately $12,391,856.14. This trade represents a 2.94% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last three months, insiders have sold 175,058 shares of company stock worth $550,591. Insiders own 9.40% of the company’s stock.

Institutional Trading of Honest

A number of institutional investors have recently bought and sold shares of the stock. Virtu Financial LLC bought a new position in Honest during the fourth quarter valued at $448,000. Invesco Ltd. boosted its stake in shares of Honest by 45.9% during the 4th quarter. Invesco Ltd. now owns 186,991 shares of the company’s stock worth $482,000 after purchasing an additional 58,784 shares during the period. Inspire Investing LLC grew its holdings in Honest by 47.1% during the 4th quarter. Inspire Investing LLC now owns 181,076 shares of the company’s stock valued at $467,000 after purchasing an additional 57,956 shares during the last quarter. Balyasny Asset Management L.P. grew its holdings in Honest by 796.2% during the 4th quarter. Balyasny Asset Management L.P. now owns 2,006,646 shares of the company’s stock valued at $5,177,000 after purchasing an additional 1,782,742 shares during the last quarter. Finally, Abel Hall LLC purchased a new stake in Honest in the 4th quarter worth about $60,000. 45.54% of the stock is currently owned by institutional investors.

Honest Company Profile

The Honest Company, Inc (NASDAQ: HNST) is an American consumer goods firm specializing in eco-friendly and responsibly formulated products for babies, personal care, beauty and home cleaning. The company emphasizes transparency in ingredient sourcing and product safety, positioning itself in the premium segment of mass-market retail and direct-to-consumer channels.

Honest was founded in 2011 by actress Jessica Alba and environmental health advocate Christopher Gavigan with a mission to offer parents household and baby care items free from harsh chemicals and synthetic fragrances.