Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q4 2016 call → NOWe need to determine if management conveys that the company is currently charging less than what the market would bear, and that they are actively closing that gap. Look for statements about pricing below value, raising prices, reducing discounts, etc. In the transcript, there are mentions of pricing actions. For example, in the US retail segment, they talk about "optimizing merchandising and driving positive net price realization for our cereal business." Also, they mention "aligning our prices more closely with our competition" for dessert mixes. But is that about undercharging? They also talk about reducing unprofitable volume, SKU rationalization, and shifting trade investments. However, the key is whether management explicitly says they are undercharging relative to value and are now raising prices. There is a mention of "we’ll increase our merchandising competitiveness in 2017 securing more display at competitive price points" for yogurt, but that seems like they are being more competitive, not necessarily raising prices. Also, they talk about "reducing low ROI trade and consumer investment" for foundation businesses, which might imply less discounting, but not necessarily that they are raising prices. The question asks: does management convey that the company is currently charging LESS than what the market would bear? That is, they have a gap between price and value, and they are closing it. Look for explicit statements. In the prepared remarks, Ken Powell says: "We are also implementing further efforts to optimize our spending, reduce complexity and streamline our operations to drive profitable growth, which will result in accelerated margin expansion." That's about costs, not pricing. Don Mulligan mentions "sharpening our practices on trade efficiencies" and "SKU rationalization" leading to mix benefits. That could be about better pricing, but not necessarily about undercharging. There is a specific mention: "we are focused on optimizing merchandising and driving positive net price realization for our cereal business." That suggests they are trying to get better prices, but is that because they were undercharging? Not explicitly. Also, they talk about "reducing unprofitable volume" which might mean they are cutting discounts, but again, not a clear statement that they are undercharging relative to value.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.