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 2017 call → NOWe need to determine if management conveys that the company is currently charging less than the market would bear, and that they are actively closing that gap. The transcript includes a question about pricing: "But is the level of pricing -- is the level of demand [indiscernible] I guess?" Jason Peterson responds: "So, from a pricing standpoint I think that we’ve got - we have opportunities in pricing in part because of the demand and a scarcity of resources in the marketplace. And as we talked in the past we do get annual increases across a significant subset of our top customers. So, there are some opportunities from a pricing standpoint if you - sort of talking about gross margin more broadly." This indicates that they have pricing opportunities due to demand and scarcity, and they get annual increases. However, does this convey that they are currently charging below value? They mention "opportunities in pricing" and "annual increases" but not explicitly that they are undercharging relative to value. They also mention that they are managing costs and pyramid. The question is whether management identifies a gap between what they charge and what it's worth, and that they are moving to close it. The response is somewhat vague. They say "we have opportunities in pricing" which suggests they could charge more, but they don't explicitly say they are leaving money on the table. Also, they mention annual increases, which are already happening. But is that a closing of a gap? They don't say that they were undercharging. They also mention that they are managing gross margin through pricing and other factors. The analyst's question was about pricing level, but management's answer is more about having opportunities. I think this is not a clear statement that they are undercharging and actively closing the gap. They are just saying they have pricing power. The instruction says NO if management merely asserts generically that it "has pricing power" without conveying that current charges sit below market. Here they say "opportunities in pricing" and "annual increases" but not that they are below value. So 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.