The Honest Company, Inc. (NASDAQ:HNST): Are Analysts Optimistic?

We feel now is a pretty good time to analyse The Honest Company, Inc.’s (NASDAQ:HNST) business as it appears the company may be on the cusp of a considerable accomplishment. The Honest Company, Inc. manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. With the latest financial year loss of US$39m and a trailing-twelve-month loss of US$4.2m, the US$695m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Honest Company will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Honest Company

Honest Company is bordering on breakeven, according to the 8 American Personal Products analysts. They expect the company to post a final loss in 2024, before turning a profit of US$2.8m in 2025. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Honest Company’s growth isn’t the focus of this broad overview, though, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Honest Company has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

There are key fundamentals of Honest Company which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Honest Company, take a look at Honest Company’s company page on Simply Wall St. We’ve also put together a list of important factors you should further examine:

1. Valuation: What is Honest Company worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Honest Company is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Honest Company’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.