The Honest Company, Inc. Fundamental Analysis (NASDAQ: HNST)
The Honest Company, Inc. Fundamental Analysis (NASDAQ: HNST)
The Honest Company, Inc. (NASDAQ: HNST) shows weak financial fundamentals with a PE ratio of -45.37, profit margin of -3.56%, and ROE of -6.99%. The company generates $0.3B in annual revenue with weak year-over-year growth of -1.86%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 18.6/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze HNST's fundamental strength across five key dimensions:
Efficiency Score
WeakHNST struggles to generate sufficient returns from assets.
Valuation Score
ExcellentHNST trades at attractive valuation levels.
Growth Score
WeakHNST faces weak or negative growth trends.
Financial Health Score
ExcellentHNST maintains a strong and stable balance sheet.
Profitability Score
WeakHNST struggles to sustain strong margins.
Key Financial Metrics
Is HNST Expensive or Cheap?
P/E Ratio
HNST trades at -45.37 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, HNST's PEG of 0.12 indicates potential undervaluation.
Price to Book
The market values The Honest Company, Inc. at 3.12 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at -3428.83 times EBITDA. This is generally considered low.
How Well Does HNST Make Money?
Net Profit Margin
For every $100 in sales, The Honest Company, Inc. keeps $-3.56 as profit after all expenses.
Operating Margin
Core operations generate -3.15 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-6.99 in profit for every $100 of shareholder equity.
ROA
The Honest Company, Inc. generates $-5.53 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The Honest Company, Inc. produces operating cash flow of $56.24M, showing steady but balanced cash generation.
Free Cash Flow
The Honest Company, Inc. generates strong free cash flow of $52.40M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $0.48 in free cash annually.
FCF Yield
HNST converts 9.79% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
-45.37
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.12
vs 25 benchmark
P/B Ratio
Price to book value ratio
3.12
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.51
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.06
vs 25 benchmark
Current Ratio
Current assets to current liabilities
3.94
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.07
vs 25 benchmark
ROA
Return on assets percentage
-0.06
vs 25 benchmark
ROCE
Return on capital employed
-0.06
vs 25 benchmark
How HNST Stacks Against Its Sector Peers
| Metric | HNST Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | -45.37 | 20.56 | Better (Cheaper) |
| ROE | -6.99% | 698.00% | Weak |
| Net Margin | -3.56% | -2241.00% (disorted) | Weak |
| Debt/Equity | 0.06 | 0.77 | Strong (Low Leverage) |
| Current Ratio | 3.94 | 2.30 | Strong Liquidity |
| ROA | -5.53% | 320.00% | Weak |
HNST outperforms its industry in 3 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The Honest Company, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
0.20%
Industry Style: Defensive, Dividend, Low Volatility
GrowingEPS CAGR
12.06%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthFCF CAGR
201.63%
Industry Style: Defensive, Dividend, Low Volatility
High Growth