Honest (NASDAQ:HNST) Issues Earnings Results

Key Points

• Q3 results beat expectations: Revenue was $84.6 million versus $80.8 million expected, while organic revenue grew 9.2%. Adjusted gross margin reached a record 48.9%, and adjusted EBITDA margin rose to 7.9%.
• Honest raised its outlook for 2026 adjusted EBITDA to $25 million–$26 million and authorized a new share repurchase program of up to $30 million. It ended the quarter with $103 million in cash and no debt.
• Growth was uneven across product lines: wipes and personal care consumption rose 15% and 11%, respectively, while diaper consumption fell 27%, weighing on overall category performance.

Honest (NASDAQ:HNST - Get Free Report) released its earnings results on Thursday. The company reported $0.03 earnings per share for the quarter, FiscalAI reports. Honest had a positive return on equity of 4.31% and a negative net margin of 3.56%. The business had revenue of $84.61 million for the quarter, compared to the consensus estimate of $80.79 million.

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

• Third-quarter organic revenue grew 9.2%, while underlying adjusted gross margin reached a company-record 48.9% and underlying adjusted EBITDA margin rose to 7.9%. The company raised its full-year organic revenue growth outlook to 6%–7% and adjusted EBITDA outlook to $25 million–$26 million.
• Wipes and personal care drove growth: wipes consumption rose 15%, including nearly 170% growth in flushable wipes, while personal care consumption increased 11%. Distribution of wipes and personal care was up nearly 20% year to date.
• Diaper consumption fell 27%, continuing to pressure the category. Overall Q3 consumption grew just 1%, although management said the shift in Amazon Prime Day timing accounted for most of the slowdown.
• Honest ended the quarter with $103 million in cash, no debt, and $30.5 million in year-to-date free cash flow. After completing its prior $25 million buyback, the board authorized a new share repurchase program of up to $30 million.
• Management plans to increase marketing and SG&A investment in Q4 to support brand building and growth, while saying structural margin improvements remain intact. The company did not provide longer-term margin expectations, saying it would give more detail in early 2027.

Honest Trading Up 5.2%

Shares of HNST traded up $0.23 during midday trading on Friday, reaching $4.67. The stock had a trading volume of 5,461,777 shares, compared to its average volume of 1,857,073. The firm has a market cap of $514.07 million, a PE ratio of 71.67 and a beta of 2.48. Honest has a one year low of $2.07 and a one year high of $6.01. The firm has a 50 day simple moving average of $5.14 and a 200-day simple moving average of $3.81.

Insider Transactions at Honest

In other news, insider Dorria L. Ball sold 6,812 shares of the firm's stock in a transaction on Thursday, August 20th. The shares were sold at an average price of $4.99, for a total transaction of $33,991.88. Following the completion of the transaction, the insider owned 418,584 shares of the company's stock, valued at approximately $2,088,734.16. This trade represents a 1.60% decrease in their ownership of the stock. The transaction was disclosed in a legal filing 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, Director Andrea Turner sold 29,899 shares of Honest stock in a transaction that occurred on Tuesday, August 11th. The stock was sold at an average price of $5.21, for a total value of $155,773.79. Following the completion of the transaction, the director directly owned 252,405 shares in the company, valued at approximately $1,315,030.05. This represents a 10.59% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Over the last three months, insiders have sold 294,149 shares of company stock valued at $1,503,306. Corporate insiders own 9.40% of the company's stock.

Key Honest News

Here are the key news stories impacting Honest this week:

• Positive Sentiment: Q3 revenue of $84.6 million beat analyst estimates of $80.79 million, while organic revenue grew 9.2%. Gross margin increased 7.7 percentage points to 45.0%, and adjusted EBITDA rose to $6.3 million, with a 7.9% margin. Reported net income was $91.3 million, but underlying adjusted net income was $3.1 million, so the reported figure should not be taken as a measure of recurring profitability. Third-quarter results
• Positive Sentiment: Honest raised its 2026 adjusted EBITDA outlook to $25 million–$26 million and authorized a $30 million share repurchase, signaling improved expectations and a commitment to return capital to shareholders. Outlook and buyback
• Positive Sentiment: B. Riley reaffirmed its Buy rating and raised its price target to $5.50 from $5.00. Analyst rating
• Neutral Sentiment: Full-year 2026 revenue guidance of $322 million–$325 million is broadly in line with the $322.5 million consensus estimate. Company outlook
• Negative Sentiment: Despite organic growth and the quarterly revenue beat, reported Q3 revenue fell 8.6% year over year, a sign that headline sales trends remain a concern. Quarterly results

Analyst Upgrades and Downgrades

Several research analysts recently weighed in on HNST shares. Weiss Ratings cut shares of Honest from a "hold (c-)" rating to a "sell (d+)" rating in a research report on Monday. Northland Securities set a $5.50 price objective on Honest in a research report on Thursday, August 6th. Morgan Stanley increased their price objective on Honest from $3.40 to $5.70 and gave the company an "equal weight" rating in a research report on Wednesday, August 12th. Telsey Advisory Group lifted their target price on Honest from $4.00 to $5.00 and gave the company a "market perform" rating in a research note on Thursday, August 6th. Finally, Wall Street Zen upgraded Honest from a "hold" rating to a "buy" rating in a research report on Saturday, August 8th. One research analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating, three have given a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat, the company presently has a consensus rating of "Hold" and a consensus target price of $5.42.

About Honest

The Honest Company, Inc is a consumer products company that develops and sells personal care, beauty, baby, and household products. Its offerings include diapers, wipes, baby care items, skin care, hair care, personal care products, and household cleaning solutions, with an emphasis on ingredient transparency and products positioned as safer and more sustainable alternatives.

Founded in 2011 by actress and entrepreneur Jessica Alba, Honest sells its products through its website and retail partners.

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