Honest (NASDAQ:HNST) Announces Quarterly Earnings Results, Beats Expectations By $0.08 EPS

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

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 Stock Performance

Shares of Honest stock traded down $0.04 on Wednesday, hitting $3.85. 1,322,633 shares of the company’s stock were exchanged, 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 has a 50-day simple moving average of $3.70 and a 200-day simple moving average of $3.15. The stock has a market capitalization of $423.81 million, a PE ratio of -22.65 and a beta of 2.12.

Analyst Ratings Changes

A number of analysts have recently issued reports on HNST shares. Weiss Ratings reaffirmed a “sell (d-)” rating on shares of Honest in a report on Tuesday, May 26th. Telsey Advisory Group reissued a “market perform” rating and set a $4.00 price objective on shares of Honest in a report on Thursday, May 7th. Alliance Global Partners restated a “buy” rating on shares of Honest in a research report on Thursday, May 7th. Wall Street Zen upgraded shares of Honest from a “sell” rating to a “hold” rating in a report on Saturday, May 9th. Finally, Morgan Stanley set a $3.40 target price on shares of Honest in a report on Thursday, May 7th. Two investment 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. According to data from MarketBeat, Honest currently has a consensus rating of “Hold” and a consensus price target of $3.47.

Insider Buying and Selling

In related news, CFO Curtiss James Bruce III sold 12,669 shares of Honest stock in a transaction on Wednesday, May 20th. The stock was sold at an average price of $3.14, for a total transaction of $39,780.66. Following the transaction, the chief financial officer directly owned 526,157 shares in the company, valued at approximately $1,652,132.98. The trade was a 2.35% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, General Counsel Brendan Sheehey sold 9,784 shares of the business’s stock in a transaction dated Wednesday, May 20th. The shares were sold at an average price of $3.14, for a total value of $30,721.76. Following the sale, the general counsel directly owned 715,888 shares of the company’s stock, valued at $2,247,888.32. This represents a 1.35% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last quarter, insiders have sold 175,058 shares of company stock valued at $550,591. Company insiders own 9.40% of the company’s stock.

Institutional Inflows and Outflows

Several institutional investors have recently made changes to their positions in the stock. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. grew its stake in shares of Honest by 6.9% during the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 49,916 shares of the company’s stock valued at $235,000 after acquiring an additional 3,210 shares during the period. Osaic Holdings Inc. raised its stake in Honest by 33.9% during the 2nd quarter. Osaic Holdings Inc. now owns 14,577 shares of the company’s stock worth $74,000 after acquiring an additional 3,693 shares during the period. The Manufacturers Life Insurance Company raised its stake in Honest by 14.9% during the 2nd quarter. The Manufacturers Life Insurance Company now owns 33,734 shares of the company’s stock worth $172,000 after acquiring an additional 4,378 shares during the period. Caitong International Asset Management Co. Ltd lifted its holdings in Honest by 1,392.2% during the third quarter. Caitong International Asset Management Co. Ltd now owns 7,073 shares of the company’s stock valued at $26,000 after purchasing an additional 6,599 shares in the last quarter. Finally, Russell Investments Group Ltd. lifted its holdings in Honest by 46.3% during the third quarter. Russell Investments Group Ltd. now owns 24,971 shares of the company’s stock valued at $92,000 after purchasing an additional 7,905 shares in the last quarter. Institutional investors own 45.54% of the company’s stock.

About Honest

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.