Head to Head Survey: Honest (NASDAQ:HNST) & Luvu Brands (OTCMKTS:LUVU)

Honest (NASDAQ:HNST) and Luvu Brands (OTCMKTS:LUVU) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Honest and Luvu Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Honest	1	5	2	0	2.13
Luvu Brands	0	0	0	0	0.00

Honest presently has a consensus target price of $5.35, indicating a potential upside of 100.37%. Given Honest’s stronger consensus rating and higher possible upside, research analysts clearly believe Honest is more favorable than Luvu Brands.

Insider & Institutional Ownership

45.5% of Honest shares are owned by institutional investors. 8.9% of Honest shares are owned by company insiders. Comparatively, 45.9% of Luvu Brands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Honest has a beta of 2.28, suggesting that its share price is 128% more volatile than the S&P 500. Comparatively, Luvu Brands has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500.

Valuation & Earnings

This table compares Honest and Luvu Brands”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Honest	$378.34 million	0.79	-$6.12 million	$0.06	44.50
Luvu Brands	$24.69 million	0.09	-$450,000.00	($0.01)	-3.00

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

Profitability

This table compares Honest and Luvu Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Honest	1.85%	3.86%	2.82%
Luvu Brands	-1.49%	-14.33%	-4.08%

Summary

Honest beats Luvu Brands on 12 of the 14 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 Luvu Brands

Luvu Brands, Inc. designs, manufactures, and markets various consumer lifestyle products worldwide. The company offers sensuality and intimacy products under the Liberator brand; and bed therapy products, which assistive in relieving medical conditions associated with acid reflux, surgery recovery, and chronic pain under the Avana brand. It also provides daybeds, sofas, and beanbags made from virgin and re-purposed polyurethane foam under the Jaxx brand. In addition, the company is involved in the purchase and resale of products to e-merchants, retailers, and e-commerce sites, as well as provision of contract manufacturing and fulfillment services. It markets its products through various websites comprising liberator.com, jaxxliving.com, and avanacomfort.com, as well as through distributors, retailers, and e-tailers across various channels of adult, mass market, drug, and specialty accounts. The company was formerly known as Liberator, Inc. and changed its name to Luvu Brands, Inc. in November 2015. Luvu Brands, Inc. was incorporated in 1999 and is headquartered in Atlanta, Georgia.