Honest (NASDAQ:HNST) Issues Earnings Results, Meets Expectations

Honest (NASDAQ:HNST - Get Free Report) released its quarterly earnings results on Wednesday. The company reported $0.01 earnings per share for the quarter, meeting the consensus estimate of $0.01, Zacks reports. The business had revenue of $78.10 million for the quarter, compared to analysts' expectations of $76.25 million. Honest had a negative net margin of 5.39% and a positive return on equity of 3.46%.

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

• Adjusted gross margin reached a record 43.5% (up ~480 bps YoY), driven by the Powering Honest Growth mix shift and favorable freight, indicating meaningful structural margin improvement.
• Consumption accelerated to 8.3% (unit consumption +20%) and organic revenue grew 3.9%, while household penetration hit a record 8.1% (+50 bps), bringing 1.6M new households over the past year.
• Wipes and personal care led growth: total wipes consumption ~25% (flushable wipes +200%, now #4) and personal care +16% (now #2 in baby personal care), supported by targeted marketing (influencer and Toy Story activations).
• Diapers remain pressured—Q1 declines moderated to -9.6% from -18.3%—and management expects the diaper category will continue to face competitive and promotional headwinds, deprioritizing it relative to higher‑margin platforms.
• Company reaffirmed FY26 framework: reported revenue down 18%–16% (due to strategic exits) with organic growth 4%–6%, adjusted gross margins in the low 40s and adjusted EBITDA $20M–$23M; balance sheet strength includes $90.4M cash, zero debt, $3.8M FCF, and ~ $11.3M of share buybacks executed/announced.

Honest Price Performance

NASDAQ:HNST opened at $3.73 on Friday. The firm has a market capitalization of $418.99 million, a P/E ratio of -21.94 and a beta of 2.15. Honest has a one year low of $2.07 and a one year high of $5.55. The company's 50-day simple moving average is $3.01 and its 200 day simple moving average is $2.80.

Honest announced that its board has approved a stock repurchase program on Friday, February 20th that allows the company to buyback $25.00 million in outstanding shares. This buyback authorization allows the company to buy up to 9.9% of its shares through open market purchases. Shares buyback programs are usually a sign that the company's board of directors believes its stock is undervalued.

Analyst Upgrades and Downgrades

HNST has been the subject of several research reports. Wall Street Zen lowered shares of Honest from a "hold" rating to a "sell" rating in a report on Saturday, April 4th. Weiss Ratings reaffirmed a "sell (d+)" rating on shares of Honest in a research note on Thursday, January 22nd. Telsey Advisory Group reiterated a "market perform" rating and set a $4.00 price target on shares of Honest in a research report on Thursday. Morgan Stanley set a $3.40 price target on shares of Honest in a research report on Thursday. Finally, JPMorgan Chase & Co. reissued an "underweight" rating on shares of Honest in a research note on Friday, January 16th. Two investment analysts have rated the stock with a Buy rating, four have issued a Hold rating and two have issued a Sell rating to the company. According to MarketBeat.com, the stock has an average rating of "Hold" and a consensus price target of $3.47.

Insider Buying and Selling at Honest

In other news, insider Dorria L. Ball sold 15,099 shares of the business's stock in a transaction that occurred on Thursday, March 5th. The stock was sold at an average price of $2.85, for a total value of $43,032.15. Following the sale, the insider directly owned 432,295 shares of the company's stock, valued at $1,232,040.75. The trade was a 3.37% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through the SEC website. Also, CEO Carla Vernon sold 129,335 shares of the company's stock in a transaction that occurred on Thursday, March 5th. The stock was sold at an average price of $2.85, for a total value of $368,604.75. Following the completion of the sale, the chief executive officer owned 4,065,546 shares in the company, valued at $11,586,806.10. The trade was a 3.08% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last ninety days, insiders have sold 191,894 shares of company stock valued at $546,898. 9.40% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the stock. Mak Capital One LLC bought a new stake in Honest in the fourth quarter worth $9,104,000. Geode Capital Management LLC increased its holdings in shares of Honest by 1.2% during the fourth quarter. Geode Capital Management LLC now owns 2,323,572 shares of the company's stock valued at $5,996,000 after acquiring an additional 28,579 shares in the last quarter. Dimensional Fund Advisors LP increased its holdings in shares of Honest by 8.2% during the third quarter. Dimensional Fund Advisors LP now owns 2,259,540 shares of the company's stock valued at $8,315,000 after acquiring an additional 171,425 shares in the last quarter. Balyasny Asset Management L.P. increased its holdings in shares of Honest by 796.2% during the fourth quarter. Balyasny Asset Management L.P. now owns 2,006,646 shares of the company's stock valued at $5,177,000 after acquiring an additional 1,782,742 shares in the last quarter. Finally, Millennium Management LLC raised its position in shares of Honest by 16.4% in the 1st quarter. Millennium Management LLC now owns 1,936,846 shares of the company's stock worth $9,103,000 after purchasing an additional 272,765 shares during the last quarter. Hedge funds and other institutional investors own 45.54% of the company's stock.

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.