The Honest Company, Inc. (NASDAQ:HNST) is a consumer goods company founded by actress Jessica Alba. It focuses on creating eco-friendly and sustainable products, including baby, personal care, and household items. The company competes with other brands in the natural and organic product space, such as Oatly Group AB and Tattooed Chef, Inc.
In evaluating The Honest Company's financial performance, the Return on Invested Capital (ROIC) is a key metric. HNST's ROIC stands at 2.69%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 14.29%. This indicates that the company is not generating sufficient returns to cover its cost of capital, which is a concern for investors.
Comparatively, Oatly Group AB has a ROIC of -27.13% and a WACC of 13.45%, resulting in a ROIC to WACC ratio of -2.02. This suggests that Oatly is also struggling to generate returns that meet its cost of capital.
Corsair Gaming, Inc. shows a ROIC of -6.61% against a WACC of 10.64%, leading to a ROIC to WACC ratio of -0.62. Despite being negative, Corsair's ratio is the highest among the peers, indicating it is closer to breaking even in terms of capital returns. Avant Brands Inc. also faces challenges with a ROIC of -21.57% and a WACC of 12.78%, resulting in a ROIC to WACC ratio of -1.69.
