News
How to value a company

By Michael O’Connor, theislandinvestor.com
Every company valuation is simply numbers from today multiplied by a story about tomorrow.
You have financial statements that give you an insight into how the company is performing at a specific moment in time, but it will be the future growth projections from management and market analysts that ultimately determine the price.
Take Tesla, for instance. Revenue and cash flows provided insight into the company’s performance, but it was predictions about future automated driving capabilities, battery production capacity and a world pivoting towards electronic vehicles that drove the company to its trillion-dollar valuation. Today, the revenue and cash flows are better than they have ever been, but the story about tomorrow has faded, and the company is down almost 60%.
While the numbers from today can be quantified, the story is driven by the future growth possibilities of the company. These future growth possibilities can seem rational at any one moment, but as the economy and company performance change, so do the growth possibilities.
Be careful how much weight you put on the stories the market is telling you about specific companies. As the information changes, so too will the story.
To quote Morgan Housel
“We can use historical data to assume a trend will continue, but that’s just a story we want to believe in a world where things change all the time”
Valuation tips
When valuing a company, you need to listen to the story being told by the company’s management team and assess whether this story is economically viable.
Here are three areas to focus on and some questions you should always ask yourself when valuing a company.
Current Cashflows
Is the company generating the profits needed to fund future business? Are the gross and net margins of the company competitive? How stable has the revenue generation been over time? Has the ROE from management been competitive?
Growth Potential
What has the revenue and earnings growth rate been over time? Are there potential revenue streams not currently being accounted for? Does the company have operating leverage that will help drive future profit margins? Does the company have a durable competitive advantage?
Future Risk
Who are the major competitors in the space, and does the company have an established moat to protect its market share? At what point will the company saturate the market, inhibiting future growth? Is the story currently being told by management viable if economic conditions changes?
Stock Picking is Hard
Since the 1940s, the phenomenal return of the S&P 500 has been generated by just 7% of the companies within the index. That is to say, 93% of the companies that made up the index reported flat or negative returns over time.
Remember, while the stock market has historically provided positive returns, picking individual names remains a difficult feat, with the odds very much stacked against you.
For those who get it right, financial elation awaits. But beware, information is constantly changing, so the probability of success can be lower than you think, no matter how strongly you believe in the future story you tell yourself.
If you have any investing questions, scan the QR code above and reach out. Always happy to help.
News
Ted Healy Properties wins DNG Small Branch of the Year
A Killarney estate agents has received a national award at the DNG National Conference and Awards, which took place at The Curragh Racecourse last week. Killarney estate agent DNG Ted […]

A Killarney estate agents has received a national award at the DNG National Conference and Awards, which took place at The Curragh Racecourse last week.
Killarney estate agent DNG Ted Healy Properties was named the ‘Small Branch of the year’ at the awards sponsored by the Irish Examiner.
The Conference and Awards ceremony was attended by more than 150 delegates from offices across Ireland where a range of topics from Ireland’s property market outlook to DNG’s recent partner affiliation with Hampton International and the role of DNG in the residential and commercial sectors, were discussed.
Delegates were entertained by guest speaker Ireland Rugby legend and La Rochelle coach Ronan O’Gara.
The judging panel of industry experts, included Peter Dargan of Irish Times, Adrian Bushnell of Pan Research, Ross Killeen of Media Pro and Keith Lowe, CEO of DNG.
The panel praised DNG Ted Healy for the high standard of service to customers and the team’s use of Social Media to enhance their business.
A native of Killarney, Ted Healy officially opened his estate agency practice in March 2006 and has gone from strength to strength ever since providing a highly professional and competent residential and commercial estate agency service to the people of Killarney and its surrounds.
“We are so grateful to be recognised as the DNG Small Branch of the year. The whole team at DNG Ted Healy has strived towards excellent for the last 12 months, and this only motivates us to continue exceeding expectations and delivering excellence to our clients,” said Ted Healy.
The awards celebrate the hard work carried out across the DNG Network and recognise the successes of individuals within the organisation, rewarding the high standards of service, business acumen and professionalism that are demonstrated in each DNG branch.
News
Fassbender ready for second Le Mans appearance
Local Hollywood A-lister Michael Fassbender is in the final preparation stages for his second appearance at the legendary 24 Hours of Le Mans. The iconic endurance race is celebrating its […]

Local Hollywood A-lister Michael Fassbender is in the final preparation stages for his second appearance at the legendary 24 Hours of Le Mans.
The iconic endurance race is celebrating its 100th edition next weekend.
The Fossa star has already arrived in the famous French twon where he is involved in a week-long series of engagements including drivers’ parades, autograph sessions and more serious appointments like car safety checks, practice and qualifying.
Like last year, when he finished 16th in the LMGTE Am class, Fassbender has been entered in to the event by the German Proton Competition team with Estonian Martin Rump and the Austrian Richard Lietz.
Fassbender dreams of following the trajectory of fellow Hollywood actors Patrick Dempsey who was second in LMGTE Am class in 2016 and Paul Newman who finished second overall in 1979.