> If you actually believe that a residential REIT is zero-risk and a casino is high-risk but they have the same ROIC, you should buy REITs and short casinos and you can make a big profit. That illustrates why there's probably a flaw in your understanding (though not necessarily! you might be able to make a big profit!). The market should have the same logic, and if this is actually true, REITs will be bid up and casinos bid down until the ROIC on casinos is higher than on REITs, appropriately compensating investors.
No, the return on an investment security (in this case, a share of publicly traded stock) is different from the return on a dollar actually invested in the underlying business (i.e., ROIC). This has a lot to do with the price action that you outline.
The rest of your comment deals with why these are bad toy examples, which is fine but not really all that interesting in context.
The security reflects how investors expect the ROIC of the underlying business to change over time, hence the "risk" aspect. They're forward looking over the life of the security's cash flows, while the company's financials now are a snapshot in time.
You're still confused. The EMH is understood to imply that securities prices are the NPV of future cash flows (or more specifically their best estimate, using all public information), but that has nothing to do with ROIC.
(As an aside, the EMH is obviously false and you don't need to look any further than meme stocks for evidence, but anyway)
For example, suppose you have two businesses, both of them have a future cash flow NPV of $1 billion. However, one of them was started in a garage with $1 million of angel money. The other one is a "fallen unicorn" that got $500 million of VC money before it finally IPOed.
The ROIC of the first company is obviously going to be something like 500x the second, but this is irrelevant to their market caps, which should be the same in textbook-EMH-land, ceteris paribus.
No, the return on an investment security (in this case, a share of publicly traded stock) is different from the return on a dollar actually invested in the underlying business (i.e., ROIC). This has a lot to do with the price action that you outline.
The rest of your comment deals with why these are bad toy examples, which is fine but not really all that interesting in context.