Honest Company Inc (NASDAQ: HNST) rallied on Wednesday after releasing strong Q3 results on Tuesday. The natural baby products company, co-founded by movie star Jessica Alba, reported 15 per cent year-over-year revenue growth at US$99 million.
For the nine months ending Sept. 30, revenue rose by over US$24 million year-over-year while gross profit increased by more than US$35 million. Net income generated last quarter also shot up by US$8 million compared to Q3, 2023.
Honest Company stock has risen by over 24 per cent since the market closed on Tuesday and by 84 per cent since Jan. 1. The company’s cash balance has climbed by US$17 million sequentially and US$30 million year-over-year. Its gross margin increased by 39 per cent from the same 3-month period in 2023, showning that revenue generated has been ascending favourably compared to the cost of the goods being sold.
Net cash provided by operating activities increased by US$9 million during the 9-month period ending in September. Additionally, The Honest Company’s total liabilities decreased by over US$3 million since Dec. 31 and the value of the health product supplier’s total assets rose by more than US$7 million.
Despite the strong results, operating expenses did rise by US$3 million year-over-year in Q3.
Can’t get over this weekly chart of Jessica Alba’s The Honest Company $HNST
My wife tells me, all the Beauty & Health YouTubers have talked about $HNST
Earnings tonight 🚨 $93 mil in revenue last qtr. Sells products in Target, but digital sales grew 28% last qtr. pic.twitter.com/OBetr0nTVj
— Sp3cul8r (@sp3cul8r) November 12, 2024
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Firms up their share targets
New York’s financial firm Telsey Advisory Group upped its stock target for Honest Company from US$4.00 to US$6.00 following release of the results.
Meanwhile, Chicago-based Loop Capital increased its prediction by US$2.00 to US$7.00 and Minnesota’s Northland Securities raised its share target by US$1.00 to US$7.50.
The Honest Company’s inception was inspired by Jessica Alba’s desire to create healthier products for her child after learning about questionable ingredients in other baby goods. She founded the company in 2012 with Christopher Gavigan, Sean Kane and Brian Lee.
By 2015, the company was valued at US$1.7 billion. In 2021, Honest Company completed its initial public offering on the Nasdaq Exchange.
In past years, the baby products distributor has faced lawsuits alleging that it has mislabeled products and deceived consumers about how “organic” its merchandise really is. Also, one from shareholders alleging that the company misled investors about the impact the pandemic had on its business.
Honest Company denied the claims, but was forced to pay one settlement totalling US$7.3 million.
In 2022, the health products operator entered the acne treatment business through a partnership with Ulta Beauty. Sixty-three per cent of the company’s revenue last year came from diapers and baby wipes.
2012: Honest Company launched.
Started with diapers and wipes.
Target: worried moms like her.
Strategy: show every ingredient.
The growth shocked everyone… pic.twitter.com/iaAWML7lRD
— George M (@GeorgeM_Growth) November 4, 2024
rowan@mugglehead.com
