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 — Q3 2017 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 while customers stay. Look for statements about pricing, discounts, promotions, etc. In the transcript, management discusses promotional spending, pricing, and mix. For example, Scott Wine mentions that they had higher promotional costs, but also that they are reducing promotional spending in Q4. Mike Speetzen says "Promotional spending will be down sequentially and versus Q4 of 2016, which was one of the key drivers behind our anticipated sequential improvement in gross margin." Also, they talk about ASPs increasing due to mix. But is there a claim that they are undercharging relative to value? They mention that they are reducing promotions, but that could be just cost recovery or normal business. They also mention that they are gaining market share while being third in promotions, implying they are not over-discounting. However, the question asks if management conveys that the company is currently charging LESS than what the market would bear, and that they are actively closing that gap. There is no explicit statement that they are undercharging relative to value. They talk about promotional spending being high, but that is a cost, not necessarily a gap. They also mention that they are reducing promotional spending, but that is a planned reduction, not necessarily a response to discovering they could charge more. They also mention that they are increasing prices? Actually, they talk about ASPs increasing due to mix, but that is not necessarily a price increase. They also mention that they are gaining share while being less promotional, which might imply they have pricing power, but they don't explicitly say they are undercharging. The question requires management's own claim that they are leaving money on the table. I don't see that. They talk about promotional costs being high, but that is a cost, not a price gap. They also talk about reducing promotions, but that is a cost reduction, not a price increase. They also mention that they are seeing positive mix, but that is not a claim of undercharging. So the answer is likely NO. I'll answer NO.
| 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.