What is Honest Company, Inc. worth?
With the base-case assumptions below, a discounted cash flow model on Honest Company, Inc.'s reported free cash flow gives $3.26 per share.
Inputs from the filings
Three sets of assumptions
| Case | Growth yrs 1-5 | Discount rate | Value per share | Value vs price |
|---|---|---|---|---|
| Bear | 0.5% | 10.0% | $2.40 | - |
| Base | 5.5% | 9.0% | $3.26 | - |
| Bull | 10.5% | 8.0% | $4.97 | - |
Sensitivity: base case value per share
| 1.5% | 2.0% | 2.5% | 3.0% | 3.5% | |
|---|---|---|---|---|---|
| 7.0% | $3.89 | $4.08 | $4.32 | $4.61 | $4.99 |
| 8.0% | $3.42 | $3.54 | $3.69 | $3.87 | $4.08 |
| 9.0% | $3.07 | $3.16 | $3.26 | $3.37 | $3.51 |
| 10.0% | $2.81 | $2.87 | $2.94 | $3.02 | $3.11 |
| 11.0% | $2.60 | $2.65 | $2.70 | $2.75 | $2.82 |
Where the presets come from
Base: years 1 to 5 grow at Honest Company, Inc.'s revenue growth rate over the last 4 fiscal years (5.4% a year), held between -5% and 15%. Years 6 to 10 grow halfway between that and the long-run rate of 2.5%. Future cash is discounted at 9% a year.
Bear: 5 points less growth, 2% long-run growth, 10% discount rate. Bull: 5 points more growth (at most 25%), 3% long-run growth, 8% discount rate.
Value per share = (present value of 10 years of free cash flow + present value of everything after + cash - debt) / diluted shares.
This is a model run on assumptions, not a recommendation or a price target. Small changes in the discount rate or growth move the result a lot, as the table above shows. Change them yourself in the calculator.
Adjust the assumptions
Move the sliders for growth, long-run growth and discount rate, or switch to average free cash flow, and see the value per share change.
Adjust the assumptions