Critical Review: Honest (NASDAQ:HNST) & Unicharm (OTCMKTS:UNICY)

Honest (NASDAQ:HNST) and Unicharm (OTCMKTS:UNICY) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, earnings, institutional ownership, valuation and risk.

Volatility and Risk

Honest has a beta of 2.15, indicating that its share price is 115% more volatile than the S&P 500. Comparatively, Unicharm has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500.

Profitability

This table compares Honest and Unicharm’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Honest	-5.39%	3.52%	2.71%
Unicharm	6.33%	6.78%	4.93%

Institutional and Insider Ownership

45.5% of Honest shares are owned by institutional investors. 9.4% of Honest shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Honest and Unicharm”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Honest	$371.32 million	0.92	-$15.69 million	($0.17)	-18.35
Unicharm	$6.32 billion	1.64	$436.93 million	$0.12	24.83

Unicharm has higher revenue and earnings than Honest. Honest is trading at a lower price-to-earnings ratio than Unicharm, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Honest and Unicharm, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Honest	2	4	2	0	2.00
Unicharm	0	1	0	1	3.00

Honest currently has a consensus target price of $3.47, suggesting a potential upside of 11.11%. Given Honest’s higher possible upside, equities research analysts plainly believe Honest is more favorable than Unicharm.

Summary

Unicharm beats Honest on 10 of the 15 factors compared between the two stocks.

About Honest

The Honest Company, Inc. manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. The company also offers baby clothing and nursery bedding products. It sells its products through digital and retail sales channels, such as its website and third-party ecommerce sites, as well as brick and mortar retailers. The company was incorporated in 2012 and is headquartered in Los Angeles, California.

About Unicharm

Unicharm Corporation engages in the manufacturing and sale of wellness, feminine, baby and children, kirei, and pet care products in Japan and internationally. The company's baby and child care products, including disposable diapers and wipes under the Moony, MamyPoko, Oyasumiman, and Torepanman brands; feminine care products comprise napkins, tampons, panty liners, sanitary short, panty liners, and other feminine care products under the Sofy, Center-In, and Unicharm brand names; and wellness care products include napkin-type incontinence pads, pants-type diapers, tape-type diapers, pants-type specialized urine pads, and tape-type specialized urine pads under the Lifree and Charmnap brand. It also provides masks under the Unicharm brand; home care products, including cleaning sheets under the Wave brand name; cosmetic cotton and wet wipes under the Silcot brand; and paper towels under the Cook Up brand name. In addition, the company offers pet care products that include pet foods, excrement cleanup sheets, system toilets, and disposable diapers under the Grand Deli, Best Balance, Physicalife Dog, Silver Plate, Aiken Genki, Manner Wear, Deo Sheet, Silver Spoon, AllWell, Physicalife Cat, Deo Toilet, Deo Sand, Deo Clean, and Neko Genki brands; and deodorizing beads. Further, it is involved in the manufacture and sale of industrial materials related products, etc., as well as food-packaging materials. Unicharm Corporation was incorporated in 1941 and is headquartered in Tokyo, Japan.