Glossary · Business quality

Moat

A lasting advantage that keeps competitors from taking a company’s profits.

Why it matters

Without a moat, high profits attract rivals until the profits are gone. Brands, networks, switching costs and scale are common moats.

High and steady returns on invested capital over many years are the clearest evidence of a moat.

In the Cluenex app, this explanation opens next to every moat figure, with the live reading for the stock you are looking at. Open it in Cluenex