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HNST, The Honest Company Inc.

E-Commerce & Marketplaces retail UnprofitableNet current asset value

Our distribution strategy positions us for continued growth through our trusted brand and award-winning multi-category product offering.

By combining thoughtful design with science-based innovation, we deliver personal care products for everyone from babies to adults, spanning categories across wipes, personal care, diapers, and beauty.

Our commitment to our core values, continual innovation and engaging our community has differentiated and elevated our brand and our products.

Latest annual: FY2025 10-K

HNST · The Honest Company Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$371M

−1.9% YoY · 4% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $352M 5-yr avg $345M

Gross margin 34% 5-yr avg 33%

Operating margin −6.1% 5-yr avg −9.1%

ROIC −22% 5-yr avg −22%

Owner-earnings margin 6% 5-yr avg −6%

Free cash flow margin 6% 5-yr avg −6%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand. Net current asset value. Current assets alone exceed every liability combined, and the surplus is most of the balance sheet: the shape Graham called a net-net.
What moves the needle: Operating margin has run around −11% through the cycle on a 33% gross margin, the operating line deeply negative — so the lever is the path to a margin at all: revenue growth against the cost curve and the cash runway, not the level of a margin that isn't there yet. Inventory runs near 23% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −23%, above 15% in 0 of 5 years). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2019–2025

realized figures from each filing · older years to the left

2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
								Income statement
$236M	$301M	$319M	$314M	$344M	$378M	$371M	$352M	RevenueRevenue
32%	36%	34%	29%	29%	38%	33%	34%	Gross marginGross mgn
30%	24%	26%	28%	27%	26%	21%	22%	SG&A / revenueSG&A/rev
2%	2%	2%	2%	2%	2%	2%	2%	R&D / revenueR&D/rev
($31M)	($14M)	($37M)	($50M)	($39M)	($6M)	($18M)	($22M)	Operating incomeOp. inc.
−13.4%	−4.5%	−11.6%	−15.9%	−11.3%	−1.7%	−5.0%	−6.1%	Operating marginOp. mgn
($31M)	($14M)	($39M)	($49M)	($39M)	($6M)	($16M)	($19M)	Net incomeNet inc.
								Cash flow & returns
($20M)	($12M)	($38M)	($76M)	$19M	$2M	$15M	$24M	Operating cash flowOp. cash
$8M	$5M	$4M	$3M	$3M	$3M	$3M	$3M	DepreciationDeprec.
($5M)	($10M)	($20M)	($45M)	$40M	($11M)	$17M	$29M	Working capital & otherWC & other
$661K	$200K	$220K	$2M	$2M	$530K	$2M	$3M	CapexCapex
0.3%	0.1%	0.1%	0.5%	0.5%	0.1%	0.4%	0.9%	Capex / revenueCapex/rev
($21M)	($12M)	($38M)	($78M)	$18M	$1M	$14M	$20M	Owner earningsOwner earn.
−8.8%	−4.1%	−12.0%	−24.8%	5.1%	0.3%	3.7%	5.8%	Owner earnings marginOE mgn
($21M)	($12M)	($38M)	($78M)	$18M	$1M	$14M	$20M	Free cash flowFCF
−8.8%	−4.1%	−12.0%	−24.8%	5.1%	0.3%	3.7%	5.8%	Free cash flow marginFCF mgn
$0	$0	$35M	$0	$0	—	—	$0	Dividends paidDiv. paid
—	—	-23%	-29%	-34%	-5%	-18%	-22%	ROICROIC
—	—	-22%	-33%	-32%	-4%	-9%	-11%	Return on equityROE
—	—	−41%	−33%	−32%	—	—	−11%	Retained to equityRetained/eq
								Balance sheet
$14M	$29M	$51M	$10M	$33M	$75M	$90M	$90M	Cash & investmentsCash+inv
—	$77M	$76M	$116M	$73M	$85M	$73M	$61M	InventoryInvent.
—	$31M	$29M	$25M	$22M	$23M	$15M	$15M	Accounts payablePayables
—	$46M	$47M	$91M	$51M	$62M	$57M	$46M	Operating working capitalOper. WC
—	$174M	$214M	$189M	$158M	$214M	$202M	$193M	Current assetsCur. assets
—	$54M	$48M	$64M	$57M	$60M	$51M	$43M	Current liabilitiesCur. liab.
—	3.2×	4.4×	3.0×	2.8×	3.6×	4.0×	4.5×	Current ratioCurr. ratio
—	$2M	$2M	$2M	$2M	$2M	$2M	$2M	GoodwillGoodwill
—	$241M	$273M	$241M	$202M	$247M	$225M	$215M	Total assetsAssets
($14M)	($29M)	($51M)	($10M)	($33M)	($75M)	($90M)	($90M)	Net debt / (cash)Net debt
($230M)	($237M)	$179M	$146M	$123M	$174M	$170M	$169M	Shareholders’ equityEquity
3.6%	2.6%	5.3%	4.8%	4.6%	4.1%	2.8%	3.0%	Stock comp / revenueSBC/rev
								Per share
67.8M	68.2M	71.1M	92.2M	94.5M	100M	111M	113M	Shares out (diluted)Shares
$3.47	$4.41	$4.48	$3.40	$3.64	$3.77	$3.34	$3.12	Revenue / shareRev/sh
$-0.46	$-0.21	$-0.54	$-0.53	$-0.42	$-0.06	$-0.14	$-0.17	EPS (diluted)EPS
$-0.30	$-0.18	$-0.54	$-0.84	$0.19	$0.01	$0.12	$0.18	Owner earnings / shareOE/sh
$-0.30	$-0.18	$-0.54	$-0.84	$0.19	$0.01	$0.12	$0.18	Free cash flow / shareFCF/sh
$0.00	$0.00	$0.49	$0.00	$0.00	—	—	$0.00	Dividends / shareDiv/sh
$0.01	$0.00	$0.00	$0.02	$0.02	$0.01	$0.01	$0.03	Cap. spending / shareCapex/sh
$-3.39	$-3.47	$2.52	$1.59	$1.30	$1.74	$1.53	$1.50	Book value / shareBVPS

Share counts before 2021 are restated ×2 for a stock split, so per-share figures sit on one basis.

Per-share growththe realized rate an owner's share compounded

	6-yr	5-yr
Revenue / share	−0.7%/yr	−5.4%/yr
Capital spending / share	+5.7%/yr	+35.8%/yr

The record, charted

FY2019–2025

Each measure over its full record; the current point and the worst year marked. Share counts on the current split basis.

Share count

111Mpeak FY2025

ROIC

−18%low FY2023

Gross margin

33%low FY2023

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$14Mowner earningsvs.($16M)net incomelow FY2022

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2023FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned a $16M loss into $14M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	($16M)	($6M)	($39M)	($49M)	($39M)
Depreciation & amortizationnon-cash charge added back	+$3M	+$3M	+$3M	+$3M	+$4M
Stock-based compensationreal costnon-cash, but a real cost	+$11M	+$16M	+$16M	+$15M	+$17M
Working capital & othertiming of cash in and out, other non-cash items	+$17M	−$11M	+$40M	−$45M	−$20M
Cash from operations	$15M	$2M	$19M	($76M)	($38M)
Capital expenditurecash put back in to keep running and to grow	−$2M	−$530K	−$2M	−$2M	−$220K
Owner earnings	$14M	$1M	$18M	($78M)	($38M)
Owner-earnings marginowner earnings ÷ revenue	4%	0%	5%	-25%	-12%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $11M), owner earnings is nearer $3M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

No meaningful interest burden

Little or no interest expense reported

What this means
Little or no interest expense reported, the business isn't leaning on lenders to operate.
How heavy is the debt, net of cash? +$90M

Net cash, debt-free

Cash $90M − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $90M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median 24%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 4%

Thin, recently turned positive

latest $14M = operating cash $15M − maintenance capex $2M; positive each of the last 3 years, after an earlier loss stretch (7-yr median -4%)

Industry peers: median 3%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 4% of revenue this year, a -4% median across 7 years. Treating stock comp as the real expense it is (less $11M of SBC) leaves $3M.
Are earnings backed by cash? $15M

Loss, but cash-generative

Net income ($16M) · cash from operations $15M

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

Where do the earnings go? 0%

Reinvests most of it

Dividends + buybacks $0 ÷ Owner Earnings $14M

What this means
Of $14M Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.52×

Harvesting

Capex $2M ÷ depreciation $3M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $371M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 3.98×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Miss

A profit every year (7-yr record) · 7 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · 1 of 7 yrs

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.18/share (latest year $-0.14), the averaged base the calculator's gate runs on, and book value is $1.54/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2019–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 0 of 7

What this means
Lost money in 7 year(s), look at what happened there before trusting the average.
Operating margin −10% → −6% (3-yr avg ends)

In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

What this means
Through the cycle the operating margin widened — about −10% early to −6% lately, median −11% — pricing power intact or improving.
Worst year 2022 · −15.9% op. margin

What this means
Operations went underwater in 2022, understand why before trusting the good years.
Dividend record paid

What this means
Paid a dividend in 1 of the years on record.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“If we fail, or are perceived to have failed, to keep pace with competitors' use of AI to improve operating efficiencies, develop commercial insights, or anticipate consumer preferences, our competitive position, market share, and financial results could be adversely affected.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$193M

Cash & short-term investments$90M
Inventory$61M
Other current assets$41M

Current liabilities$43M

Accounts payable$15M
Other current liabilities$28M

Current ratio4.51×all current assets ÷ what's due · Graham looked for 2×

Quick ratio3.08×stricter: inventory excluded

Cash ratio2.11×strictest: cash alone against what's due

Working capital$150Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago−19.7%the freshest read on whether the business is still growing

Current ratio, recent quarters3.1× → 4.5×

Deeper floors

Tangible book value$167Mequity stripped of goodwill & intangibles

Net current asset value$147MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$12M$12M of it operating leases

From the company's latest filing.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid.

Insider ownership9.4%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$11M
The slice of the business handed to employees in shares this year, 3% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Stock compensation as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, E-Commerce & Marketplaces

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
GCTGigaCloud Technology Inc	$1.3B	—	11.2%	84%	13%
SFIXStitch Fix Inc.	$1.3B	44%	-3.0%	-35%	3%
RVLVRevolve Group	$1.2B	53%	6.6%	39%	4%
BBBYBed Bath & Beyond Inc.	$1.0B	23%	-4.3%	-201%	-3%
BBWBuild-A-Bear Workshop Inc.	$530M	53%	8.5%	34%	4%
HNSTThe Honest Company Inc.	$371M	33%	-11.3%	-23%	-4%
TDUPThredUp Inc.	$311M	71%	-22.5%	-54%	-13%
ELAEnvela Corporation	$241M	22%	5.1%	24%	1%
Group median	—	44%	1.0%	1%	2%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what The Honest Company Inc. has delivered.

Today’s price $

Base Normalize · through-cycle ($11M) Net of stock comp (−$11M) Steady-state · maintenance capex ($22M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · since FY2023−12%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $20M on 110M shares outstanding, per the 10-Q cover, as of 2026-05-01; net cash $90M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($3M) runs well above depreciation ($3M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $22M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh HNST against another business →

Cite: Owner Scorecard, "The Honest Company Inc. (HNST), the owner's record," https://ownerscorecard.com/c/HNST, data as of 2026-07-09.

Manual order: ← HNRG its page in the Manual HOG →

Industry order: ← HEPS the E-Commerce & Marketplaces chapter JMIA →