Critical Review: Betterware de Mexico SAPI de C (NYSE:BWMX) versus Honest (NASDAQ:HNST)

Betterware de Mexico SAPI de C (NYSE:BWMX) and Honest (NASDAQ:HNST) are both small-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Profitability

This table compares Betterware de Mexico SAPI de C and Honest’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Betterware de Mexico SAPI de C	8.35%	77.89%	11.28%
Honest	-3.56%	4.31%	3.33%

Insider & Institutional Ownership

12.7% of Betterware de Mexico SAPI de C shares are owned by institutional investors. Comparatively, 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 endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Betterware de Mexico SAPI de C and Honest”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Betterware de Mexico SAPI de C	$744.00 million	0.87	$55.37 million	$1.83	8.94
Honest	$371.32 million	1.52	-$15.69 million	($0.11)	-46.55

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Betterware de Mexico SAPI de C and Honest, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Betterware de Mexico SAPI de C	0	2	0	1	2.67
Honest	1	5	2	1	2.33

Honest has a consensus target price of $4.84, suggesting a potential downside of 5.47%. Given Honest’s higher probable upside, analysts clearly believe Honest is more favorable than Betterware de Mexico SAPI de C.

Risk & Volatility

Betterware de Mexico SAPI de C has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Honest has a beta of 2.32, indicating that its share price is 132% more volatile than the S&P 500.

Summary

Betterware de Mexico SAPI de C beats Honest on 8 of the 14 factors compared between the two stocks.

About Betterware de Mexico SAPI de C

Betterware de Mexico, S.A.B. de C.V. operates as a direct-to-consumer company in Mexico. The company focuses on the home organization segment with a product portfolio, including home solutions, kitchen and food preservation, technology and mobility, and other categories. It serves approximately 3 million households through distributors and associates in approximately 800 communities throughout Mexico. The company was formerly known as Betterware de México, S.A.P.I. de C.V. Betterware de Mexico, S.A.B. de C.V. was founded in 1995 and is based in Zapopan, Mexico. Betterware de Mexico, S.A.B. de C.V. is a subsidiary of Campalier, S.A. de C.V.

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.