ROIC without reinvestment rate tells you almost nothing

Summary

• The post argues that Return on Invested Capital (ROIC) is an incomplete metric without considering the reinvestment rate.
• The author's thesis is that a business's true compounding ability depends on both its quality (ROIC) and its ability to scale that quality (reinvestment rate), and that many investors mistakenly identify "compounders" by looking only at ROIC.
• Quality assessment: This is a thoughtful opinion or conceptual framework piece. It is not well-researched DD on specific securities, nor is it speculation or noise. It is a valuable reminder of a key investment principle.