The Honest Company Posts Breakeven Q3 Earnings, Raises FY24 View

The Honest Company, Inc. HNST reported solid third-quarter 2024 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.The Honest Company reported impressive double-digit revenue growth, hitting an all-time high in sales, alongside a significant expansion in gross margin. The company's strategic focus on its transformation pillars, brand maximization, margin enhancement and operating discipline has been key to its success. The better-than-expected third-quarter results led management to raise its 2024 guidance.The Honest Company’s Quarterly Performance: Key InsightsThe Honest Company posted breakeven quarterly earnings, which beat the Zacks Consensus Estimate of a loss of 3 cents per share. The bottom line increased from a loss of 9 cents reported in the year-ago quarter.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Honest Company, Inc. Price, Consensus and EPS Surprise The Honest Company, Inc. price-consensus-eps-surprise-chart | The Honest Company, Inc. QuoteTotal revenues rose 15.2% year over year to $99.2 million due to an increase in wipes revenues of $9.9 million, an increase in baby personal-care revenues of $2.3 million, an increase in diaper revenues of $1.8 million and an increase in baby apparel revenues of $1.5 million. This was partly offset by a decline in skincare and color cosmetics revenues of $2.7 million. The top line beat the consensus estimate of $93 million.Gross profit rose 41.1% year over year to $38.4 million. This growth was related to cost savings, including lower transportation, product and fulfillment expenses and sales volume growth. The gross margin expanded 710 basis points (bps) to 38.7%, with approximately 400 bps related to supply chain cost reductions and 300 bps related to product cost reductions.The company’s operating expenses increased 8.9% year over year to $38.3 million. As a percentage of revenues, operating expenses decreased 221 bps year over year. The company continues to demonstrate strong expense control, with selling, general and administrative expenses reduced 441 bps as a percentage of revenues, partially offset by increased investment in retail marketing to drive brand maximization pillar.Adjusted EBITDA was $7.1 million against a loss of $1.1 million reported in the same period last year. This marks the company’s fourth consecutive quarter of positive adjusted EBITDA. The adjusted EBITDA margin was 7.1%.HNST ended the third quarter with household penetration reaching 6.7%.HNST’s Financial Health SnapshotThe Honest Company concluded the quarter with cash and cash equivalents of $53.4 million and stockholders’ equity of $133.9 million. The company reported no debt on its balance sheet as of Sept. 30, 2024.In the first nine months ended Sept. 30, 2024, the company’s net cash provided by operating activities was $18.4 million.Sneak Peek Into HNST’s 2024 OutlookFor 2024, HNST anticipates a high single-digit percentage growth in revenues from 2023. The company had earlier guided mid to high single-digit percentage growth.HNST now anticipates adjusted EBITDA in the range of $20-$22 million, an increase from the previous guidance of $15-$18 million. This marks a significant turnaround from the adjusted EBITDA loss of $11.2 million reported in 2023.Gross margin is expected in the range of 37-38%, benefiting from cost savings in both product costs and supply chain efficiencies.This Zacks Rank #3 (Hold) stock has gained 41.6% in the past three months against the industry’s decline of 2.2%.Image Source: Zacks Investment ResearchStocks to ConsiderThe Gap, Inc. GAP operates as an apparel retail company, which offers apparel, accessories and personal care products for men, women and children, currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for The Gap’s current fiscal-year sales and earnings indicates growth of 0.5% and 31.5%, respectively, from the year-ago quarter’s reported numbers. GAP has a trailing four-quarter average earnings surprise of 142.8%. Abercrombie & Fitch Co. ANF, through its subsidiaries, operates as an omnichannel retailer, which offers an assortment of apparel, personal care products and accessories for men, women and kids, currently carrying a Zacks Rank #2. ANF has a trailing four-quarter average earnings surprise of 28%.The consensus estimate for Abercrombie’s current financial-year sales and earnings indicates growth of 13% and 64.2%, respectively, from the year-ago period’s reported figures.Foot Locker, Inc. FL, operates as a footwear and apparel retailer, currently carrying a Zacks Rank #2. FL has a trailing four-quarter average earnings surprise of 40.8%.The Zacks Consensus Estimate for Foot Locker’s current financial-year earnings indicates growth of 5.6% from the year-ago period’s reported figures.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Foot Locker, Inc. (FL): Free Stock Analysis Report The Gap, Inc. (GAP): Free Stock Analysis Report The Honest Company, Inc. (HNST): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks