Connect with us

News

Focus on the earnings, not the noise

Published

on

0221951_M_O_Connor_1000x600.jpg

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.

Advertisement

News

Missing Killarney chef located dead in UK

Published

on

By

Missing Killarney chef located dead in UK


A 34-year search for missing former Killarney chef Patrick (Patsy) O’Sullivan ended following confirmation that he was located deceased in the UK.


Patsy was 35 years old when last seen by relatives in Lombardstown, County Cork, during the Easter Bank Holiday weekend in April 1992. At the time of his disappearance, he was working as a chef in Waterville, having previously worked across several Killarney hotels. He was scheduled to attend a family Christening shortly after returning from Kerry, but never arrived.
Despite decades of public appeals, including features on RTÉ’s Crimecall, his location remained unknown.
Investigations revealed that Patsy moved to the UK and changed his name to Patrick Aldridge in 1995, adopting the surname of his partner who passed away in 2022. He passed away from natural causes on July 5, 2024, living just over an hour away from his brother who also passed away in the UK last year.
Speaking on Cork’s 96FM, his brother Jerry O’Sullivan confirmed the family finally received closure following renewed efforts led by Garda PJ Roche and investigating officers. He noted that while unanswered questions remain about why Patsy started over fresh, the family is grateful for the work that brought final answers.
An Garda Síochána confirmed the missing person case is closed and thanked the public for their assistance over the years.


IN MEMORY: Patrick (Patsy) O’Sullivan, a native of North Cork who worked as a chef in Killarney and Waterville, went missing in April 1992 and was located deceased in the UK. Photo: Garda Press Office.

Attachments

Continue Reading

News

Speed cameras go live at Farranfore level crossing

Published

on

By

Speed cameras go live at Farranfore level crossing

An Garda Síochána, Iarnród Éireann, Transport Infrastructure Ireland, and Kerry County Council put new safety enforcement cameras into operation at the Farranfore level crossing this week.

The GoSafe system, which went live at 12pm on Tuesday, October 6, automatically detects vehicles running red lights or breaking the speed limit as they approach and cross the railway track.

Farranfore is only the second level crossing on the national rail network to feature the technology, following a trial at Merrion Gates in Dublin where driver compliance reached 99.7 per cent. Up to six crossing locations nationwide are slated to receive the units.

The system targets two distinct traffic violations. Proceeding past a stop line when red lights are flashing carries an automated Fixed Charge Notice of €80 and two penalty points, rising to five penalty points upon court conviction. Speeding violations trigger a €160 fine and three penalty points, which can increase to five points and fines up to €1,000 if prosecuted in court.

Iarnród Éireann highlighted excessive approach speed as a key safety factor at the Farranfore junction. Nationwide, 31 incidents involving vehicles or bicycles colliding with automated level crossing gates have occurred in 2026 to date, up from 23 in 2025.

Highlighting the risk to local road users, Road Safety Officer with Kerry County Council Declan Keogh said: : “The new safety cameras at Farranfore railway crossing serve as a dual-safety mechanism, for road users and for rail users and operators. I would urge all motorists to think twice before taking that chance to get across the railway line when the warning lights have activated and the barriers are lowering. All too often those chances have proved unsuccessful, with serious consequences.”

Iarnród Éireann Chief Executive Mary Considine noted that interfaces between road and rail traffic represent one of the primary safety risks on the network, adding that automated cameras encourage drivers to reduce speed and obey active signals.

Assistant Commissioner Ferry of the Garda National Roads Policing Bureau welcomed the joint venture, stating that technology-led enforcement will significantly assist in maintaining safety across shared transport networks.

50km/h zone enforced at Farranfore

Motorists traveling through Farranfore are reminded that the speed limit on the approach to and across the railway crossing is strictly 50km/h.

While automated safety systems enforce both signal compliance and vehicle speed, the 50km/h limit remains the maximum legal speed on the N22 section approaching the crossing gates.

The newly activated GoSafe cameras record vehicle speeds automatically in both directions. Any motorist detected exceeding the 50km/h threshold will automatically receive a €160 Fixed Charge Notice alongside three penalty points applied to their driving licence.

Local authorities and Gardaí advise drivers approaching Farranfore from both the Tralee and Killarney directions to adjust their driving speed early, monitor active signals, and prepare to stop safely when warning lights activate.

Continue Reading