We feel now is a pretty good time to analyse The Honest Company, Inc.'s (NASDAQ:HNST) business as it appears the company may be on the cusp of a considerable accomplishment. The Honest Company, Inc. manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. The US$391m market-cap company posted a loss in its most recent financial year of US$39m and a latest trailing-twelve-month loss of US$12m shrinking the gap between loss and breakeven. As path to profitability is the topic on Honest Company's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts' expectations for the company.

Honest Company is bordering on breakeven, according to the 8 American Personal Products analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$3.0m in 2026. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 68%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Honest Company given that this is a high-level summary, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

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 key factors 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.

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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.