What's the best return metric in evaluating a company? I think there's a fair case to be made that it's ROIC compared to WACC.
ROIC is Return on Invested Capital, and while it's a little tougher to calculate that Return on Assets or Return on Equity, I think it's a fairer measure. What does a company return on all the money that's been put into it? This includes common equity, preferred equity, and borrowed money.
Return on Assets can also be seen as Return on (Equity + Liabilities). Used that way, you're measuring the return on all sorts of things that don't really matter, such as Accounts Payable. While accounts payable are certainly liabilities, borrowed in some sense from a company's suppliers, it's a stretch to think of them as "investments." Viewed as ROA, it's also not a particularly good measure for many companies. Assuming you make proper allowance for people who'll stiff you, does it make sense to calculate Return on Accounts Receivable?
Return on Equity has a better case. After all, you're looking at buying stock, not making a loan. So shouldn't you be analyzing what use a company makes of its equity? Well, to a point. Except that that number can be "improved" by borrowing more, buying back stock, or increasing leverage in a thousand other ways.
ROIC is much harder to jerk around that way, and measures how well the company's handling all the real capital at its disposal. It's also got an analog on the cost side: WACC, or Weighted Average Cost of Capital, or how much the company has to pay for all this funding. If I know what its return is on capital, and I know what it's paying for that capital, I can tell how much the company's actually returning, ROIC - WACC.
In fact, you could argue that this is analogous to an NPV calculation on the management side.