# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Moat Size

The measure of the competitive barrier, if any, that gives a company an advantage over its rivals and allows it to generate above-average returns on invested capital.

Four major types of economic moats are

  • high customer switching costs
  • economies of scale
  • intangible assets such as brands or patents
  • the network effect

Morningstar divides stocks into three categories according to moat size:

  • wide moat (companies with the strongest competitive advantage)
  • narrow moat (those with some competitive advantage)
  • no moat (those with no sustainable competitive advantage)

 

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