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[ Tue, Dec 03rd 2024 ]: Thomas Matters
November Market Review

The Metric Every Investor Should Use (But Probably Doesn't)

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Warren Buffett's Time Until Payback metric can help investors avoid mistakes and evaluate investment opportunities effectively. Read more here.
The article from Seeking Alpha discusses the importance of using the Return on Invested Capital (ROIC) as a key metric for investors, which many might overlook. ROIC measures how effectively a company uses the money invested in its operations to generate profit, providing insight into the efficiency and profitability of a company beyond what traditional metrics like earnings growth or P/E ratios can offer. The author argues that ROIC is crucial because it helps investors understand whether a company is creating value over its cost of capital. The piece explains how ROIC can be calculated, its significance in evaluating a company's performance, and why it should be a staple in investment analysis. It also highlights that companies with high ROIC tend to outperform those with lower ROIC over the long term, making it an essential tool for identifying potentially successful investments.

Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4741954-metric-every-investor-should-use-probably-doesnt ]