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Focus on the earnings, not the noise

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By Michael O’Connor    

Major Indexes reversed gains early in the week to finish nearly 2% lower as tensions on the Russian Ukrainian border prolong the current market uncertainty.

In addition to the feds ability to fight inflation, the prospect of war has been added to the mix.

This uncertainty has led to some dramatic price fluctuations as stocks violently whipsaw.

We have seen mega-cap names trade like penny stocks, as the apparent lack of euphoric outlook continues to bring the valuations of many of these names firmly into focus.

It appears that valuations actually do matter, and growth at any price isn’t a flawless investing strategy. Who would have thought?

IT’S NOT ALL BAD NEWS!

It’s important to highlight that earnings growth has continued over the quarter, the companies that make up these stock market indexes are now more profitable than ever.

The fundamental of these businesses are strong, but the endless growth narrative that pushed many of these names to record valuations is being re-examined.

For example, Netflix’s reported actual earnings per share (EPS) of $1.33 for Q4, which was well above the mean EPS estimate of $0.83.

Not too shabby, right?

Wrong.

The market doesn’t care about what has happened nearly as much as it cares about what will happen.

From January 18 to January 24, the stock price for Netflix fell 24.2% based on disappointing forward guidance.

Despite having five times higher net income, double the revenue and over 100 million extra subscribers, Netflix is now trading below its June 2018 price as its growth outlook is adjusted downwards.

Over this period, Netflix has been a classic case of good company, bad stock. In 2018, too much of the growth story had already been baked into the price, leaving little room for an upside surprise. So, despite the success of the company over this period, the stock has grossly underperformed the broader market.

In short, the huge expectation placed on these high growth names following the onset of the pandemic was simply unsustainable. The market is now re-rating these stocks to account for the more realistic growth outlook.

RETURNING TO NORMAL

Looking at the positives; stock prices have fallen but earnings estimates have increased over recent months.

Many of the growth names that have seen considerable declines have now been re-rated towards more respectable metrics without significant disruption to the broader market.

Facebook, Netflix, Shopify, PayPal, Zoom and Square have lost more than $1.1 trillion in market cap from their peaks seen in 2021.

Yes, it has been particularly painful if you’re holding these individual names (I hold two…unfortunately), but the S&P has managed to eliminate much of the excess without entering correction territory.

This concentrated valuation correction across many of these high profile names now leaves the market in a much healthier position from a valuation standpoint.

For example, the forward 12-month P/E ratio for the S&P 500 is currently 19.2. This is below the 19.5 times forward earnings recorded prior to the pandemic.

While geopolitical events may weigh on markets over the immediate term, recent pull backs have helped to strip the pandemic exuberance out of the market.

These lower valuation metrics as earnings continue to rise offering a more attractive entry point for buyers waiting on the sidelines.

Focus on the earnings, not the noise. Earnings ultimately drive market returns.

To read my full market analysis, go to www.theislandinvestor.com.

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An end of year message from Johnny McGuire, President, Killarney Chamber of Tourism and Commerce

It has been a particularly busy and a hugely progressive and positive year for Killarney Chamber of Tourism and Commerce in 2025 with many highlights that have helped maintain Killarney’s […]

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It has been a particularly busy and a hugely progressive and positive year for Killarney Chamber of Tourism and Commerce in 2025 with many highlights that have helped maintain Killarney’s reputation as a great town to live in, a wonderful town to do business in and a fabulous town to visit.

A number of senior chamber members achieved great success throughout the year, including Patrick O’Donoghue of the Gleneagle Group being named Kerry Business Leader of the Year, Pat O’Leary, of the Kerry Tourism Industry Federation and formerly of Liebherr Container Cranes, joining the board of Tourism Ireland and KWD Recycling winning a national environmental award for its waste recovery practices.
Killarney also performed exceptionally well in both the national tidy towns competition, winning a gold medal, and the Irish Business Against Litter League and Chamber played a very active part in both.
Killarney, of course, could not achieve what it does without the wonderful contribution of volunteers, right throughout the community, including those who help out with the numerous festivals, parades and events that chamber hosts every year.
Thanks are due also to tidy towns and the Mountain Meitheal volunteers who took to the woods to continue the fight against rhododendron – in association with the National Parks and Wildlife Service – an impressive 50 times this year.
In an ongoing effort to keep members fully briefed, Chamber also hosted some very engaging guest speakers at many of its gatherings throughout 2025, including retail consultant Eddie Shanahan, IBEC chief Danny McCoy, Minister of State Michael Healy-Rae, Kerry County Council chief executive Fearghal Reidy and cyber security experts Mike Dennehy and Ger McAuliffe from progressive local company Tricel.
In a new departure this year chamber published informative monthly newsletters for members to keep them fully briefed on events happening in Killarney, what the chamber has been doing and what is in the pipeline.
Con and Anne Stack, founders of Tricel, were the recipients of the 2025 Order of Inisfallen Award, which is organised by Chamber and Kerry County Council.
Active Chamber members, the Randles family of the Dromhall and Randles Hotels, celebrated 60 years in business in the company of the Taoiseach.
Our big events, the St Patrick’s Festival, Wander Wild, the Celebration of Irish-American Friendship and, of course, Christmas in Killarney continue to grow and prosper and we thank all those involved for their hard work and dedication in ensuring they are such a big success.
This year the Chamber, in association with the Killarney Parish, chose to honour the memory of the late Donal Grady, a former Mayor of Killarney, by dedicating the star at the top of the Tree of Light on the grounds of St Mary’s Cathedral in his name and we would encourage everybody to pay a visit, to remember Donal and to marvel at the magnificent spectacle that the Tree of Light actually is.
Towards the end of 2025, Chamber welcomed a new chamber vice president, Carol Dempsey and we all look forward to her input and to working closely with her on several projects as the new year unfolds.
It is important to acknowledge the long-serving co-president Padraig Treacy for his remarkable contribution to chamber and we are delighted to confirm that Padraig will remain on in the wings which is where he always likes to be.
Killarney Chamber of Tourism and Commerce takes great heart from comments made by Taoiseach Micheál Martin at the Dromhall Hotel 60th celebrations when he described Killarney as being a great town for getting things done and just getting on with it and as a location that had tourism in its DNA.
On the same day Chamber representatives had a private meeting with Mr Martin at which we lobbied him to introduce the long-promised latte levy so that the coffee cup initiative first introduced in Killarney can get a new lease of life and go on to thrive on a nationwide basis, just like the plastic bag levy introduced some years ago.
Killarney Chamber of Tourism and Commerce wishes everybody in Killarney, our members, the local people visitors and those who are home for Christmas a very happy, peaceful and safe festive season and every blessing and good wish for the year ahead.

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Charity walk on Old Kenmare Road to support Kerry Mountain Rescue

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A charity walk along the Old Kenmare Road will take place on Saturday, December 27, to raise funds for Kerry Mountain Rescue Team, with the Sam Maguire Cup set to join walkers for the day.

The 17km trek is being organised by well known fundraiser and musician Derry Healy, James Cahill and their supporters.

The event was inspired by Killarney man James Cahill, who was seriously injured in a fall while descending Carrauntoohil in July 2016 and was rescued by Kerry Mountain Rescue Team.

He was treated at the scene before being airlifted to University Hospital Kerry and later spent months in rehabilitation.


Walkers will set off from the Upper Torc Car Park at 9.30am and follow the Old Kenmare Road to Kenmare.

Along the route, there will be a stop at the restored Sheep Shed at Eskamucky Glen for music and a set dance with the Sam Maguire Cup.


A free bus transfer will be available from Kenmare back to Killarney, with booking required in advance.

Donations can also be made directly to Kerry Mountain Rescue Team, which operates on a voluntary basis and relies heavily on fundraising and public support.

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