What underlying fundamental trends can indicate that a company might be in decline? A business that’s potentially in decline often shows two trends, a return on capital employed (ROCE) that’s declining, and a base of capital employed that’s also declining. This indicates to us that the business is not only shrinking the size of its net assets, but its returns are falling as well. On that note, looking into Alcoa (NYSE:AA), we weren’t too upbeat about how things were going.
Return On Capital Employed (ROCE): What is it?
Just to clarify if you’re unsure, ROCE is a metric