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How to value a company

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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.

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Local friendship inspires Wicklow charity challenge

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Local friendship inspires Wicklow charity challenge


A local friendship between a Polish native and a well-known community volunteer has inspired a fundraising effort for the Kerry branch of the Irish Kidney Association.


Kasia Kolodziej, who works in administration at Munster Joinery, is taking on the 7km Hell and Back obstacle course in Wicklow on Saturday, September 5.
Originally from Luban in Poland, Kolodziej settled in the town three years ago following spells in Killorglin and Castleisland. Upon arriving, she formed a close bond with long-standing local volunteer Theresa Looney, who has dedicated over four decades to supporting kidney patients across the county.
Looney originally helped establish the Kerry branch of the Irish Kidney Association after campaigning for local dialysis facilities to prevent patients travelling to Cork for treatment. She was also a founding member of the Ring of Kerry Charity Cycle, which helped secure the dialysis unit at University Hospital Kerry, and continues to manage local self-catering holiday homes for visiting patients and their families.
Kolodziej has already raised over €1,700 online to support the upkeep of these holiday homes in Killarney and Tralee.
Speaking about the inspiration behind her challenge, Kolodziej praised the support she received from her friend when moving to the area. “When I moved to Killarney three years ago, Theresa took me under her wing,” she said. “She has a heart of gold and was very kind to me. And now I want to give something back.”
To prepare for the course, which involves mud, water, and steep climbing obstacles, Kolodziej has been training at Peak Performance Academy. She explained that while obstacle runs are a step outside her comfort zone, she is eager to tackle the course to raise vital funds and encourage local families to discuss organ donation.

Kasia’s online fundraising link will remain open until October 5, with donations welcome. To donate online visit www.idonate.ie/fundraiser/kasiakolodziej641
For more information on the work of the Irish Kidney Association and how to get an organ donor card, including a digital donor card that can be stored in a mobile phone wallet, visit www.ika.ie

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Listowel festival honours Gneeveguilla seanchaí Éamon Kelly

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Listowel festival honours Gneeveguilla seanchaí Éamon Kelly


The Listowel International Storytelling Festival returns from September 17 to 20, featuring four days of traditional music, poetry, and international performances.


This year’s theme, “Past Voices, Future Stories,” honours the legacy of Ireland’s traditional storytellers while providing a platform for new artists. A major highlight of the four-day gathering is a special tribute to legendary Gneeveguilla seanchaí, actor, and playwright Éamon Kelly, marking the 25th anniversary of his passing.
Born in Sliabh Luachra in 1914, Kelly left school at 14 to work as an apprentice carpenter before pursuing a career in acting and storytelling. He joined the Radio Éireann Players in 1952 and performed extensively with both the Gate and Abbey theatres in Dublin. In 1966, he earned a Tony Award nomination for his role in Brian Friel’s play Philadelphia, Here I Come!.
The festival tribute features an archival exhibition documenting his career, alongside a celebratory concert with storytellers Nuala Hayes, Frances Kennedy, Daisy Kearney, and Danny Larkin, performing with Sliabh Luachra musicians Bryan O’Leary and Aidan Connolly. A dedicated panel discussion, chaired by theatre historian Dr Fiona Brennan, will feature Kelly’s son, Eoin Kelly, discussing his father’s life and artistic contributions.
International storytellers and performers from the USA, the UK, Morocco, Japan, the Czech Republic, Germany, and Belgium will join leading Irish artists across the weekend. The line-up includes a Culture Night showcase featuring the Listowel Community Youth Choir, local school visits, storytelling workshops, and a jazz performance by Karen Underwood celebrating the music of Nina Simone.
Executive Director of the Kerry Writers’ Museum Cara Trant highlighted the importance of remembering the Gneeveguilla native.
“We are particularly proud to celebrate Éamon Kelly during this year’s festival,” Ms Trant said. “His remarkable legacy reminds us of the power of a voice, a story, and an audience gathered together. Through this programme, we honour the storytellers who came before us while creating space for new voices to be heard.”
The full festival schedule and ticket details are available directly through the Kerry Writers’ Museum in Listowel.

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