🗞 10 Companies With True Pricing Power

Happy Sunday!

Here’s what’s on the docket for this week’s newsletter:

• 💼 10 Companies With True Pricing Power

• 🤯 FinChat’s Latest Improvements

Let’s dive in!

10 Companies with True Pricing Power

Warren Buffett once said “The single most important decision in evaluating a business is pricing power.”

The beauty of pricing power is that it allows companies to increase their sales without any corresponding increase to costs. If a company can raise prices sustainably, that often means they’re able to grow profits at extraordinary rates.

And for shareholders, that typically means extraordinary returns.

Here are 10 companies that have demonstrated true pricing power:

1. American Express

The average cost required just to be able to use an American Express card has gone from $61/year five years ago to $111/year today.

They have been able to increase their average fee per card at just over 12% per year and they’ve still added 34 million new cardholders over that timeframe.

2. Fair Isaac Corporation

After renegotiating their license agreement with the major credit bureaus in 2018, FICO has rapidly raised the cost to pull its credit scores on consumers.

After stagnant growth for nearly a decade, FICO’s Scores Revenue has more than tripled since 2018.

3. Coca-Cola

Coca-Cola’s pricing and product mix has lifted its revenue by nearly 4% on an annual basis over the last 10 years.

Meanwhile, the price increases have shown no impact on demand as the total number of Coca Cola shipments continues to grow worldwide.

4. Ferrari

The average price of a Ferrari currently costs $426,665.

In 2012, the average Ferrari cost $228,938.

Ferrari has been able to grow the average price of its vehicle by 5.2% per year for more than a decade.

5. ASML

A single ASML lithography machine costs $189 million on average.

That's more than 4 times what one of their machines went for in 2012.

6. Constellation Brands

The company behind leading beer brands like Modelo and Corona has grown its revenue per beer shipment by just over 2% annually.

Over that same timeframe they've more than doubled their total beer shipments.

7. Hermès

Hermès handbags are reserved for the ultra wealthy.

The luxury good giant intentionally limits the supply of their handbags to make them seem that much more alluring. In fact, the company’s famous Birkin Bags range in price from $10,000 all the way up to $2 million.

Despite intentionally restricting supply, Hermès has grown their Leather Goods revenue by 12% a year thanks to their strong pricing power.

8. Netflix

In the hyper-competitive streaming industry, Netflix added 22 million new paying subscribers in North America over the last 5 years.

They were able to add that many subscribers while also increasing their average revenue per membership by nearly 7% annually over that timeframe.

9. Starbucks

The cost of an average Starbucks transaction has grown by ~4% a year over the last decade.

Meanwhile, the price increases haven’t had too much impact on demand. The number of transactions at the average Starbucks store has increased in 10 of the last 12 years.

10. Autodesk

After moving from a licensing model to a Software-as-a-Service model, Autodesk has been increasing the price of its products consistently.

So much so, that in 2020 a collection of customers actually sent a joint letter to Autodesk’s CEO asking the company to stop raising prices. Subscription revenue is up 79% for Autodesk since that letter was sent.

Platform Update

Morningstar Research Report AI Summaries

Two weeks ago, the FinChat team brought in Morningstar’s equity research reports to the platform.

Now, every FinChat subscriber has access to Morningstar’s high quality reports on ~1,700 companies globally. These include initiation reports, quarterly updates, and much more.

But to make your research process that much faster, we’ve also introduced the ability to summarize or custom query these reports using AI.

Meme of the Week

For those of you that haven’t been following the recent news, Tesla CEO Elon Musk and US President Donald Trump had a falling out this week (if you’d like to call it that).

After several heated exchanges over social media posts, in a dramatic twist of events, Elon “dropped the really big bomb”. He reminded the people of Twitter that they can get a phenomenal deal on an institutional-grade financial data platform through FinChat.io (here’s the real post if you’d like to see it).

That’s right, with FinChat, investors can get:

• 20 years of Financial Data on all stocks globally

• 12+ years of Segment & KPI Data on more than 2,000 companies

• Morningstar Equity Research Reports

• Unlimited Events (Conference Call Transcripts, Investor Days, Conferences)

• 3 Years of Analyst Estimates

And much, much more!