Advantage Solutions (NASDAQ:ADV – Get Free Report) and Honest (NASDAQ:HNST – Get Free Report) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.
Volatility and Risk
Advantage Solutions has a beta of 2.19, indicating that its stock price is 119% more volatile than the S&P 500. Comparatively, Honest has a beta of 2.3, indicating that its stock price is 130% more volatile than the S&P 500.
Profitability
This table compares Advantage Solutions and Honest’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Advantage Solutions | -6.97% | -34.40% | -8.04% |
| Honest | 1.85% | 3.86% | 2.82% |
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Advantage Solutions | $3.57 billion | 0.08 | -$326.96 million | ($0.75) | -1.18 |
| Honest | $378.34 million | 0.82 | -$6.12 million | $0.06 | 46.17 |
Honest has lower revenue, but higher earnings than Advantage Solutions. Advantage Solutions is trading at a lower price-to-earnings ratio than Honest, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
49.8% of Advantage Solutions shares are held by institutional investors. Comparatively, 45.5% of Honest shares are held by institutional investors. 7.9% of Advantage Solutions shares are held by company insiders. Comparatively, 8.9% of Honest shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Advantage Solutions and Honest, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Advantage Solutions | 1 | 0 | 1 | 0 | 2.00 |
| Honest | 1 | 5 | 1 | 0 | 2.00 |
Advantage Solutions currently has a consensus target price of $2.25, indicating a potential upside of 155.16%. Honest has a consensus target price of $4.00, indicating a potential upside of 44.40%. Given Advantage Solutions’ higher possible upside, research analysts clearly believe Advantage Solutions is more favorable than Honest.
Summary
Honest beats Advantage Solutions on 9 of the 12 factors compared between the two stocks.
About Advantage Solutions
Advantage Solutions Inc. provides business solutions to consumer goods manufacturers and retailers in North America and internationally. It operates in two segments, Sales and Marketing. The Sales segment offers brand-centric services, such as headquarter relationship management; analytics, insights, and intelligence; and brand-centric merchandising services. This segment also provides retailer-centric services comprising retailer-centric merchandising and in-store media services. The Marketing segment offers brand-centric services, including shopper and consumer marketing, and brand experiential services; retailer-centric services, such as retail experiential and private label services; and digital marketing, and digital media and advertising services. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016. The company was founded in 1987 and is headquartered in Irvine, California.
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.
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