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Economic Moat Score

Measures the durability of a company's competitive advantage using five quantitative signals derived from annual financial statements.

Score: 0–100 (higher = wider moat) Width: wide (≥65) | narrow (40–64) | none (<40)

Signals

Signal Weight Logic
ROIC Persistence 30% Average ROIC vs WACC hurdle across years; sustained excess returns signal a durable advantage
Pricing Power 25% Gross margin level and stability; high, stable gross margins indicate pricing authority over suppliers and customers
Reinvestment Quality 20% Incremental return on invested capital (ROIIC); high returns on new capital signal a scalable moat
Operating Leverage 15% Revenue growth relative to asset growth; asset-light growth indicates structural efficiency advantage
CAP Estimate 10% Competitive Advantage Period — projected years of above-WACC returns, based on ROIC spread and its stability

Default WACC hurdle: 10%. Override with wacc=0.08 for capital-light businesses.

Usage

from fin_ratios.utils.moat_score import moat_score_from_series, moat_score
from fin_ratios.fetchers.edgar import fetch_edgar

# From raw annual data (oldest first)
annual_data = fetch_edgar('AAPL', num_years=7)
score = moat_score_from_series(annual_data, wacc=0.09)

print(score.score)     # 82
print(score.width)     # 'wide'
print(score.table())   # formatted signal breakdown

# One-liner (fetches automatically)
score = moat_score('AAPL', years=7, source='edgar', wacc=0.09)

import { moatScoreFromSeries } from 'fin-ratios'
import { fetchEdgarFlat } from 'fin-ratios/fetchers/edgar'

const annualData = await fetchEdgarFlat('AAPL')
const score = moatScoreFromSeries(annualData, 0.09)

console.log(score.score)   // 82
console.log(score.width)   // 'wide'

Output Structure

@dataclass
class MoatScore:
    score: int              # 0–100
    width: str              # wide / narrow / none
    components: MoatComponents
    evidence: list[str]
    interpretation: str

@dataclass
class MoatComponents:
    roic_persistence: float      # 0–1
    pricing_power: float         # 0–1
    reinvestment_quality: float  # 0–1
    operating_leverage: float    # 0–1
    cap_score: float             # 0–1

# cap_estimate_years is a top-level field on MoatScore (not in components)

Minimum Data Requirements

  • At least 3 years of data for a meaningful score
  • 5+ years recommended for ROIC persistence signal
  • ebit, income_tax_expense, invested_capital (or total_equity + total_debt + cash) required for ROIC

References

  • Mauboussin, M. & Callahan, D. (2013). Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation.
  • Morningstar Economic Moat methodology.
  • Buffett, W. (1999 Letter to Berkshire Shareholders) — moat as durable competitive advantage.