Forensic Analysis · Retail / Consumer Discretionary · as of Sep 25, 2026
Honest Company, Inc. (HNST)
A forensic read on Honest Company, Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
D · Weak — demands caution
Forensic grade
Safe
Financial health
7.1
Distress distance
Clean
Earnings quality
3
Forensic signals
-51.4
P / E (ttm)
-9.2%
ROE
$556M
Market cap
0.00%
Dividend yield
-1.9%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (red flags, auditor quality, say on pay, board independence, going concern, valuation). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Honest Company, Inc. earns a D (Weak — demands caution) forensic quality grade, and its balance-sheet distress test reads 7.1, placing it in the Safe zone. 3 forensic signals were flagged in its latest SEC filings, led by return on invested capital.
What the filings flag
-17.2%
FY2025
Return on invested capital.Return on invested capital is -17.2% in the latest fiscal year, against -27.4% in FY2023, having run between -27.4% and -4.5% across FY2023–FY2025 with no direction held. After-tax operating profit was ($31M) in FY2023 and ($15M) in FY2025, with operating income at -11.3% of revenue in FY2023, -1.7% in FY2024 and -5.0% in FY2025. The capital base behind it came down -24% across FY2023–FY2025, from $112M to $85M, so this is a return struck on a smaller base rather than a record of money put to work. FY2025's operating profit carried a $4M restructuring charge and a $3M asset write-down that alone took about 6.5 points off that year's return, so the latest return is depressed by that charge.
+8.5%/yr
FY2023–FY2025
Share-count dilution.Diluted share count changed +18% over the last 2 years to FY2025 (+8.5%/yr). The count is growing: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~8.5% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2023 has been diluted ~15%.
3% of rev
FY2025
Stock-based comp load.Stock-based compensation ran 3% of revenue and 77% of free cash flow in FY2025 — about $0.09 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 8.5% a year and that rate is not falling, so total profit has to grow by that much annually before any of it reaches a share. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
Key fundamentals
Latest Revenue$371.3M
Revenue Growth YoY-1.9%
Revenue CAGR (2yr)+3.8%
Net Margin-4.2%
Free Cash Flow$13.6M
Return on Equity-9.2%
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Honest Company, Inc.'s actual 10-K/10-Q/8-K filings?