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 — Q2 2023 call → NOWe need to determine if management conveys that the company is charging less than the market would bear, and that they are actively closing that gap. The transcript discusses various segments. In Chicken, they mention pricing actions, but also cost increases. They talk about "benefits of prior period pricing actions" and "price increases" but also "input costs were higher" and "derivative impact". They mention "we are not fully exposed to commodity markets" and "there are lags". They talk about "price increases we saw during the quarter are expected to affect Q3." That suggests they are raising prices, but is it because they were undercharging? They say "marketing conditions remain very challenging. Commodity prices for most fresh chicken cuts are much lower than last year... While we're not fully exposed to commodity markets, we are not immune to their dynamics. Some might expect these dynamics to impact our results immediately. But in fact, they work through on a lag. As chicken commodity prices declined in Q1, the impact continued into our Q2, while price increases we saw during the quarter are expected to affect Q3." This suggests they are raising prices, but it's not clear if it's to close a gap between price and value. They also mention "we made a series of strategic decisions" including converting plants, rationalizing assets, closing plants. They talk about "we reduced our finished inventory pounds by nearly 20%". They talk about "we are focused on improving our results in Chicken." But do they say they are undercharging? No. They talk about cost increases and derivative impacts. They mention "price increases we saw during the quarter" but that could be passing through costs? Actually, they say "input costs were higher compared to last year as our feed, ingredient cost increased $145 million." So they have cost increases. They also have "unfavorable year-over-year derivative impact of approximately $135 million." So they are dealing with costs. They also mention "benefits of prior period pricing actions drove 2% growth in sales" - that suggests they had pricing actions earlier. But is that to close a gap? Not necessarily. In Prepared Foods, they talk about "pricing gains" and "price increases" but also "increased raw material costs" and "brand building investments." So that's cost recovery.
| 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.