MeritValue

Honest Company, Inc.

HNSTdata completeness 88%7 fiscal years on file

Data notes: no data for concept 'totalDebt'; no data for concept 'interestExpense'

The thesis, from the filings

Honest Company, Inc. earns about -21% on invested capital, below its ~9% cost of capital, but has diluted owners by 56% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $2.98 and $3.16 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$318.6M1$313.7M2$344.4M3$378.3M3$371.3M3
Net income−$38.7M4−$49M5−$39.2M6−$6.12M6−$15.7M6
Operating cash flow−$38.2M7−$76.3M8$19.4M9$1.54M9$15.1M9
Capital expenditure$220,00010$1.62M11$1.84M12$530,00012$1.51M12
Free cash flow (derived)−$38.4M7−$77.9M8$17.5M9$1.01M9$13.6M9
Total debt—————
Cash & equivalents$50.8M13$9.52M13$32.8M14$75.4M15$89.6M15
Diluted shares71.1M92.2M94.5M100.2M111.2M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$15.26
your share of equity
Profit it earned you last year
−$1.41
Free cash flow it threw off
$1.22
Debt you’d be carrying
—

10 shares is a claim on $15.26 of net worth that earned you −$1.41 and generated $1.22 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-21% avg · 5y
FY21 -24%FY22 -28%FY23 -34%FY24 -5%FY25 -15%

It earned about -21% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+56% shares · 5y

Share count is up 56% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $2.98 and $3.16 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$3.16
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$13.6M
DCF · Growth Exit 5Y
$2.98
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$13.6M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $2.98
The three cases
Bear0.0%$2.55
Base5.0%$2.98
Bull10.0%$3.48

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001530979-24-000028 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001530979-25-000016 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001628280-26-011634 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001530979-24-000028 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001530979-25-000016 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001628280-26-011634 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001530979-24-000028 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001530979-25-000016 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001628280-26-011634 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001530979-24-000028 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001530979-25-000016 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001628280-26-011634 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001530979-24-000028 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2023-12-31 · accession 0001530979-25-000016 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2024-12-31 · accession 0001628280-26-011634 (CashAndCashEquivalentsAtCarryingValue)