The Honest Company, Inc. (NASDAQ:HNST) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. The Honest Company, Inc. manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. With the latest financial year loss of US$6.1m and a trailing-twelve-month loss of US$1.5m, the US$494m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Honest Company will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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Honest Company is bordering on breakeven, according to the 7 American Personal Products analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$9.3m in 2025. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 70%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Honest Company's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

See our latest analysis for Honest Company

Before we wrap up, there’s one aspect worth mentioning. Honest Company currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Honest Company, so if you are interested in understanding the company at a deeper level, take a look at Honest Company's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

1. Valuation: What is Honest Company worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Honest Company is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Honest Company’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.