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Honest Stock Soars 7.21%, Adding $34 Million After The Company Raises Its Outlook

Organic sales rose despite a reported revenue decline, while an $89.4 million tax benefit made up much of reported profit.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

— 2 min read
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Honest Stock Soars 7.21%, Adding $34 Million After The Company Raises Its Outlook

The Honest Company, a personal-care products company, saw its shares soar 7.21% to $4.76 in Friday trading, as of 1:56 PM ET, adding $34 million in market value. The gain followed Thursday’s third-quarter results and a raised outlook, alongside a new share-buyback authorization.

Sales Growth Beneath The Revenue Decline

Honest’s third-quarter sales told different stories depending on the measure. Reported revenue totaled $84.6 million, an 8.6% decline from a year earlier, but organic revenue—the company’s adjusted sales measure—reached $79.3 million, up 9.2%.

Profit also needs that distinction. An $89.4 million income-tax benefit accounted for much of the $91.3 million in reported net income. Adjusted net income was $3.1 million, according to the company’s results release.

The outlook increase came with a buyback authorization. Management also plans to increase spending on administration and marketing in the fourth quarter, according to its earnings-call comments.

A Strong Year, A Recent Retreat

HNST entered Friday’s session with a sizable year-to-date advance but a recent pullback. At Thursday’s close, the shares were up 72% for the year, compared with an 8% gain for the S&P 500.

The stock had nevertheless fallen 14% over the previous month. At Thursday’s close, it stood 25% below its highest closing price of the past year.

Honest’s total market value reached $510.67 million in Friday trading, as of 1:56 PM ET.

HNST was on pace for its biggest one-day gain since Aug. 6 in Friday trading, as of 1:56 PM ET.

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