Analyzing RealReal (NASDAQ:REAL) and Honest (NASDAQ:HNST)

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

Institutional and Insider Ownership

64.7% of RealReal shares are owned by institutional investors. Comparatively, 45.5% of Honest shares are owned by institutional investors. 9.0% of RealReal shares are owned by insiders. Comparatively, 8.9% of Honest shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares RealReal and Honest”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RealReal	$600.48 million	2.09	-$134.20 million	($1.06)	-10.27
Honest	$378.34 million	1.15	-$6.12 million	$0.05	78.40

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

Risk and Volatility

RealReal has a beta of 2.5, suggesting that its stock price is 150% more volatile than the S&P 500. Comparatively, Honest has a beta of 2.32, suggesting that its stock price is 132% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for RealReal and Honest, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RealReal	0	1	4	0	2.80
Honest	0	4	3	0	2.43

RealReal currently has a consensus price target of $11.70, indicating a potential upside of 7.44%. Honest has a consensus price target of $6.96, indicating a potential upside of 77.51%. Given Honest’s higher possible upside, analysts clearly believe Honest is more favorable than RealReal.

Profitability

This table compares RealReal and Honest’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RealReal	-5.55%	N/A	-8.90%
Honest	1.66%	3.84%	2.67%

About RealReal

The RealReal, Inc. operates an online marketplace for resale luxury goods in the United State. The company offers various product categories, including women's fashion, men's fashion, jewelry, and watches. It primarily sells products through online marketplace and retail stores. The company was incorporated in 2011 and is headquartered in San Francisco, 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.