Q2 Earnings Review: Personal Care Stocks Led by The Honest Company (NASDAQ:HNST)

As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the personal care industry, including The Honest Company (NASDAQ:HNST) and its peers.

While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.

The 13 personal care stocks we track reported a slower Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 14.6% below.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility, and while some personal care stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.3% since the latest earnings results.

Best Q2: The Honest Company (NASDAQ:HNST)

Co-founded by actress Jessica Alba, The Honest Company (NASDAQ:HNST) sells diapers and wipes, skin care products, and household cleaning products.

The Honest Company reported revenues of $93.05 million, up 10.1% year on year. This print exceeded analysts’ expectations by 6.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ revenue and gross margin estimates.

“This quarter, it is evident that our team’s commitment to our three Transformation Pillars of Brand Maximization, Margin Enhancement, and Operating Discipline is working, resulting in outstanding performance that has exceeded our expectations. In addition to delivering our highest quarterly revenue of $93 million in the second quarter, we continued to increase profitability and achieved gross margin of 38%. This strong performance and momentum give us confidence to raise our financial outlook for the full year,” said Chief Executive Officer, Carla Vernón.

The Honest Company achieved the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 28.2% since reporting and currently trades at $4.16.

Is now the time to buy The Honest Company? Access our full analysis of the earnings results here, it’s free.

e.l.f. (NYSE:ELF)

e.l.f. Beauty (NYSE:ELF), which stands for ‘eyes, lips, face’, offers high-quality beauty products at accessible price points.

e.l.f. reported revenues of $324.5 million, up 50% year on year, outperforming analysts’ expectations by 6.6%. It was a solid quarter for the company with an impressive beat of analysts’ earnings estimates.

e.l.f. scored the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 27.9% since reporting. It currently trades at $135.60.

Is now the time to buy e.l.f.? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: BeautyHealth (NASDAQ:SKIN)

Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.

BeautyHealth reported revenues of $90.6 million, down 22.9% year on year, falling short of analysts’ expectations by 8.1%. It was a weak quarter for the company with revenue guidance for next quarter missing analysts’ expectations.

BeautyHealth had the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 34.1% since the results and currently trades at $1.73.

Read our full analysis of BeautyHealth’s results here.

Medifast (NYSE:MED)

Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE:MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.

Medifast reported revenues of $168.6 million, down 43.1% year on year, falling short of analysts’ expectations by 3.2%. Zooming out, it was a weak quarter for the company with revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ earnings estimates.

Medifast had the slowest revenue growth among its peers. The stock is down 5.9% since reporting and currently trades at $19.72.

Read our full, actionable report on Medifast here, it’s free.

Inter Parfums (NASDAQ:IPAR)

With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ:IPAR) manufactures and distributes fragrances worldwide.

Inter Parfums reported revenues of $342.2 million, up 10.7% year on year, surpassing analysts’ expectations by 1.3%. More broadly, it was a good quarter for the company with a decent beat of analysts’ gross margin estimates but full-year revenue guidance missing analysts’ expectations.

The stock is down 6.1% since reporting and currently trades at $122.34.

Read our full, actionable report on Inter Parfums here, it’s free.

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