Fact based stock research
The Honest Company (NasdaqGS:HNST)

US4383331067

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

The Honest Company stock research in summary

honest.com

ANALYSIS: With an Obermatt Combined Rank of 98 (better than 98% compared with investment alternatives), The Honest Company (Personal Products, USA) shares have much better financial characteristics than comparable stocks. Shares of The Honest Company are low in value (priced high) with a consolidated Value Rank of 35 (worse than 65% of alternatives). But they show above-average growth (Growth Rank of 87) and are safely financed (Safety Rank of 74, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 98, is a strong buy recommendation based on The Honest Company's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company The Honest Company exhibits low value (Obermatt Value Rank of 35), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 87). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 74) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	35
Growth Rank	87
Safety Rank	74
Combined Rank	98

Country	USA
Industry	Personal Products
Index	NASDAQ
Size class	Medium

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: The Honest Company

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	n/a	43	58	35
GROWTH
GROWTH	n/a	19	45	87
SAFETY
SAFETY	n/a	79	73	74
SENTIMENT
SENTIMENT	n/a	93	35	^new
360° VIEW
360° VIEW	n/a	59	55	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better The Honest Company is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	n/a	43	58	35
GROWTH
GROWTH	n/a	19	45	87
SAFETY
SAFETY	n/a	79	73	74
COMBINED
COMBINED	n/a	80	74	98

Last update of combined financial performance: 4-Jul-2024. Stock analysis on combined financial performance: The higher the rank of The Honest Company the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 35 (worse than 65% compared with alternatives), The Honest Company shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half are above average for The Honest Company. Price-to-Sales (P/S) is 62, which means that the stock price compared with what market professionals expect for future sales is lower than for 62% of comparable companies, indicating a good value concerning The Honest Company's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 50% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 1 (dividends are expected to be higher than for 1% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 71% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for The Honest Company to 29. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 35, is a hold recommendation based on The Honest Company's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	n/a	61	78	62
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	n/a	27	50	50
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	n/a	46	50	29
DIVIDEND YIELD
DIVIDEND YIELD	n/a	1	1	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	n/a	43	58	35

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of The Honest Company; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 87 (better than 87% compared with alternatives) for 2024, The Honest Company shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for The Honest Company. Profit Growth has a rank of 88, which means that currently professionals expect the company to grow its profits more than 88% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 93 (above 93% of alternative investments). But Sales Growth has a below the median rank of 48, which means that, currently, professionals expect the company to grow less than 52% of its competitors, and Capital Growth also has a lower rank of 22. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 87, is a buy recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for The Honest Company. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	n/a	67	50	48
PROFIT GROWTH
PROFIT GROWTH	n/a	26	54	88
CAPITAL GROWTH
CAPITAL GROWTH	n/a	49	25	22
STOCK RETURNS
STOCK RETURNS	n/a	9	59	93
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	n/a	19	45	87

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of The Honest Company.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 74 (better than 74% compared with alternatives), the company The Honest Company has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of The Honest Company is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators where two out of three are above average for The Honest Company.Leverage is at 81, meaning the company has a below-average debt-to-equity ratio. It has less debt than 81% of its competitors.Refinancing is at a rank of 56, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 56% of its competitors. Liquidity is at 16, meaning that the company generates less profit to service its debt than 84% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 74 (better than 74% compared with alternatives), The Honest Company has a financing structure that is safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. Investors should compare Obermatt’s Value, Growth, and Sentiment Ranks before deciding. They may also want to investigate why cash flows are expected to be low, making debt service for The Honest Company more challenging. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	n/a	100	87	81
REFINANCING
REFINANCING	n/a	61	75	56
LIQUIDITY
LIQUIDITY	n/a	15	1	16
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	n/a	79	73	74

Last update of Safety Rank: 4-Jul-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of The Honest Company and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	70	22	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	69	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	67	56	^new
MARKET PULSE
MARKET PULSE	n/a	68	41	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	93	35	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for The Honest Company.
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