by Bradley Cipriano, CPA
  Equity Analyst, Gradient Analytics LLC (a Sabrient Systems company)

 At Gradient Analytics, we spend a significant amount of our time analyzing financial statements and looking for accounting irregularities (or shenanigans) and signs of misleading “financial engineering.” When we find a firm employing aggressive accounting tactics, we often notice that they operate in industries that are undergoing significant change or are in secular decline. This makes sense, considering that companies in such industries tend to exhibit declining top- and bottom-line growth rates. By applying aggressive accounting assumptions, management can temporarily juice both sales and earnings growth.

However, just because a company operates within an industry in secular decline does not necessarily mean it will struggle to grow. The stronger players often can accumulate greater market share and prosper, while the weaker players lose market share and fade away.

In this article, I provide a cursory overview of ten industries that we believe are in secular decline and opine on some of their constituents – highlighting a few that we think may thrive and a few that we think will struggle.  Read on…