What Happened?
A number of stocks fell in the afternoon session after the oil price surge raised input cost concerns for an industry (personal care) that relies heavily on petroleum-derived ingredients.
Manufacturers faced a renewed margin squeeze just as Estée Lauder and other industry players began cutting headcount and resetting expectations. Furthermore, while personal care was historically considered defensive, recent Conference Board data revealed even beauty and personal care spending intentions softened as inflation fatigue spread.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Personal Care company Edgewell Personal Care (NYSE: EPC) fell 3.6%. Is now the time to buy Edgewell Personal Care? Access our full analysis report here, it’s free.
- Personal Care company The Honest Company (NASDAQ: HNST) fell 3.8%. Is now the time to buy The Honest Company? Access our full analysis report here, it’s free.
Zooming In On The Honest Company (HNST)
The Honest Company’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 24% on the news that the company reported weak third-quarter results that missed revenue expectations and lowered its full-year forecast for sales and earnings.
For the quarter, revenue fell 6.7% from the previous year to about $93 million, falling short of analyst expectations. The bigger concern for investors was the updated outlook. The Honest Company cut its full-year revenue projection from a prior estimate of 4% to 6% growth to a new range of a 3% decline to flat. In addition, the company revised its adjusted earnings (EBITDA) forecast downward to a range of $21 million to $23 million, a drop from the previous guidance of $27 million to $30 million. These results came as the company announced a new plan, called “Transformation 2.0,” aimed at simplifying its business by getting rid of less profitable products.
The Honest Company is up 28.9% since the beginning of the year, but at $3.37 per share, it is still trading 38.9% below its 52-week high of $5.51 from May 2025. Despite the year-to-date gain, investors who bought $1,000 worth of The Honest Company’s shares 5 years ago would now be looking at only $146.30.
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