Sharp-eyed investors spot these clues when bad managers destroy a stock. Here’s what they look for.

Companies create value by focusing on both growth and return on capital and finding the right balance for their business. Thirty-five years after writing the first edition of Valuation: Measuring and Managing the Value of Companies, it’s now in its eighth edition. In more than 35 years working with companies on value creation, these fundamental principles for corporate managers have remained and never let us down.

Those 35 years have not been without frustration. Many companies still do not adhere to the fundamentals — and wind up destroying shareholder value as a result.  Fortunately, the shortcomings of established companies are frequently offset by the value creation from new, disruptive companies — not just in technology but across industries, from consumer goods and retail to financial services.