Honest (NASDAQ:HNST) Releases Earnings Results, Misses Expectations By $0.23 EPS

Honest (NASDAQ:HNST) posted its quarterly earnings data on Wednesday. The company reported ($0.21) earnings per share (EPS) for the quarter, missing the consensus estimate of $0.02 by ($0.23), FiscalAI reports. The company had revenue of $88.04 million for the quarter, compared to analyst estimates of $88.57 million. Honest had a negative net margin of 4.22% and a positive return on equity of 4.47%.

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

• The company has materially narrowed its portfolio by exiting apparel, Canada, and Honest.com fulfillment, right-sized SG&A, and is consolidating warehouses to focus on wipes, personal care, and diapers.
• Honest reported strong underlying demand with organic revenue of $294M (+5.3%) and consumption growth of 5% in 2025—driven by wipes (+30%) and personal care (+12%)—and guides to 4%–6% organic growth in 2026.
• Profitability is improving—adjusted gross margin 38.7% in 2025 (up 50 bps) and management expects adjusted gross margins in the low-40s in 2026, supported by the Powering Honest Growth program targeting $10M–$15M of annual savings and H2 warehouse benefits.
• The balance sheet is strong with ~$90M cash, no debt, and an inaugural $25M share repurchase authorization, giving the company flexibility to return capital while funding growth.
• Diapers—still ~30% of sales—saw double-digit consumption declines due to retailer assortment shifts, lapped promotions, and consumers trading down; management says diapers will remain a headwind in 2026 and faces a ~20%–30% price premium challenge.

Honest Stock Up 3.4%

Shares of HNST traded up $0.10 during mid-day trading on Friday, reaching $2.89. The company had a trading volume of 607,618 shares, compared to its average volume of 1,907,349. The stock has a market capitalization of $322.51 million, a P/E ratio of -20.46 and a beta of 2.30. Honest has a 52-week low of $2.07 and a 52-week high of $5.62. The stock has a 50 day moving average of $2.47 and a two-hundred day moving average of $3.09.

Hedge Funds Weigh In On Honest

Institutional investors have recently made changes to their positions in the company. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. grew its position in Honest by 6.9% during the first quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 49,916 shares of the company’s stock valued at $235,000 after buying an additional 3,210 shares during the period. Millennium Management LLC boosted its stake in shares of Honest by 16.4% during the 1st quarter. Millennium Management LLC now owns 1,936,846 shares of the company’s stock worth $9,103,000 after acquiring an additional 272,765 shares in the last quarter. Goldman Sachs Group Inc. grew its position in shares of Honest by 18.1% during the 1st quarter. Goldman Sachs Group Inc. now owns 1,064,179 shares of the company’s stock valued at $5,002,000 after acquiring an additional 163,380 shares during the period. Creative Planning increased its stake in shares of Honest by 183.2% in the 2nd quarter. Creative Planning now owns 64,942 shares of the company’s stock valued at $331,000 after purchasing an additional 42,008 shares in the last quarter. Finally, Rhumbline Advisers increased its stake in shares of Honest by 18.1% in the 2nd quarter. Rhumbline Advisers now owns 134,690 shares of the company’s stock valued at $686,000 after purchasing an additional 20,603 shares in the last quarter. 45.54% of the stock is owned by hedge funds and other institutional investors.

Wall Street Analyst Weigh In

A number of brokerages have issued reports on HNST. Zacks Research lowered shares of Honest from a “hold” rating to a “strong sell” rating in a research note on Wednesday. Morgan Stanley dropped their price objective on shares of Honest from $4.25 to $3.00 and set an “equal weight” rating on the stock in a report on Wednesday, November 19th. JPMorgan Chase & Co. reissued an “underweight” rating on shares of Honest in a research report on Friday, January 16th. B. Riley Financial reaffirmed a “buy” rating on shares of Honest in a research report on Thursday, November 6th. Finally, Telsey Advisory Group reiterated a “market perform” rating and set a $3.00 price target on shares of Honest in a research note on Thursday. One equities research analyst has rated the stock with a Buy rating, three have assigned a Hold rating and three have given a Sell rating to the company’s stock. According to MarketBeat, the stock currently has an average rating of “Reduce” and an average target price of $3.00.

Key Headlines Impacting Honest

Here are the key news stories impacting Honest this week:

• Positive Sentiment: Board-authorized $25M share repurchase (up to ~9.9% of shares) signals management believes the stock is undervalued; supports buyback-driven EPS/share support. RTT News: Stock Buybacks
• Positive Sentiment: Analyst write-up highlights stronger cash balance, debt-free balance sheet and the buyback; notes low 0.57x forward EV/Sales and potential margin expansion that could drive a rerating. The Honest Company: Strong Cash Position As Transformation Gains Traction
• Neutral Sentiment: Telsey Advisory Group reaffirmed a “market perform” rating with a $3.00 price target—modest upside vs. current levels but not a strong buy signal. Benzinga: Telsey Reaffirmation
• Neutral Sentiment: Company released Q4 results, slide deck and earnings call transcript — useful for modeling and management commentary though interpretation is mixed. Q4 2025 Earnings Call Transcript
• Negative Sentiment: Q4 EPS missed materially: ($0.21) vs $0.02 expected; revenue $88.04M slightly below estimates. Management lowered FY2026 revenue guidance to $306–$312M vs. consensus ~ $340M — a meaningful shortfall that pressures near-term growth expectations. Press Release: Q4 & FY2025 Results
• Negative Sentiment: Zacks downgraded HNST from “hold” to “strong sell,” adding selling pressure from the sell-side and signaling lowered conviction among some analysts. TickerReport: Zacks Downgrade
• Negative Sentiment: Market reaction included an initial stock drop after results (coverage notes the sell-off), reflecting investor concern over the guidance cut and EPS miss despite buyback news. Yahoo Finance: Stock Drops After Q4

Honest announced that its Board of Directors has approved a share repurchase program on Friday, February 20th that authorizes the company to repurchase $25.00 million in outstanding shares. This repurchase authorization authorizes the company to buy up to 9.9% of its stock through open market purchases. Stock repurchase programs are typically a sign that the company’s leadership believes its shares are undervalued.

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.