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Recent Articles
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Positive Pricing Elasticities Continue to Power Pepsi
Jul 14, 2023
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Image: Effective net pricing continues to be strong at Pepsi. Image Source: PepsiCo.
On July 13, PepsiCo, Inc. reported excellent second-quarter 2023 results. The firm’s pricing power continues to impress as the executive team manages modest losses in organic volume with huge effective net pricing increases. We’re sticking with the high end of our fair value estimate range for Pepsi of ~$220 per share as pricing power will likely continue for as long as pricing elasticities remain positive.
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Dividend Increases/Decreases for the Week of July 14
Jul 14, 2023
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Let's take a look at firms raising/lowering their dividends this week.
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Pet Insurer Trupanion’s Business Facing Numerous Challenges; Short Interest at 35%+
Jul 12, 2023
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Image: Trupanion may be growing its top line like a weed, but its operating losses have been growing, too. Image Source: Trupanion 10-K.
The insurance business is a tough one, and medical pet insurance may be even more difficult. A number of dynamics from adverse selection to conflicts of interest to lack of bargaining power within the industry’s structure have plagued Trupanion’s financial performance for years, with the company accumulating significant net losses since inception. We’re huge fans of Trupanion’s moaty network of clients and veterinarians as well as its tremendous top-line growth potential, but veterinarians continue to capture the industry’s economic rents, in our view, to the detriment of Trupanion’s shareholders. Unit economics have not been adding up at Trupanion either, and free cash flow has been meager at best for a very long time. As veterinarian costs continue to rise and the firm receives push back on proposed rate increases, Trupanion’s net losses may continue to mount, and even under optimistic assumptions, Trupanion’s shares could be considered rich.
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Domino’s Pizza Breaks Through Downtrend on Uber Eats and Postmates Deal
Jul 12, 2023
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Image Source: Domino’s Pizza is up nearly 14% on a year-to-date basis during 2023, but the company’s shares haven’t done much over the past 52 weeks.
On July 12, Domino’s Pizza announced that it had inked a new deal with Uber that would allow customers in the U.S. to order Domino’s food through the Uber Eats and Postmates apps with delivery provided by drivers of Domino’s and its franchisees. Domino’s Pizza continues to be a standout leader in digital initiatives across the restaurant arena, and the firm noted that the new agreement will open up Domino’s and its franchisees “to a new segment of customers and what (it) believes will be a meaningful amount of incremental delivery orders.” The high end of our fair value estimate of Domino’s stands at $450 per share.
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