Definition
Economic Moat
A durable competitive advantage that protects a company’s profits.
An economic moat is a lasting edge that makes it hard for competitors to steal a company’s customers or profits — think of a brand people trust, a network that gets more useful as it grows, high switching costs, or a cost advantage rivals can’t match. The wider the moat, the longer a business can earn strong returns before competition catches up. Market Lens’s Moat score looks for that evidence in net profit margin, return on equity, gross margin, revenue growth, and company size.
How Market Lens scores moats →
Related terms
- Return on Invested Capital (ROIC)How much profit a company earns on the money invested in the business.
- Return on Equity (ROE)How much profit a company earns on shareholders’ money.
- Net Profit MarginThe share of revenue a company keeps as bottom-line profit.
- Intrinsic ValueAn estimate of what a business is actually worth, apart from its share price.
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