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Stock Strategist

An Introduction to Economic Moats

Here's how we do it.

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How does Morningstar decide whether a company has a wide, narrow, or nonexistent economic moat?

That's a simple question with a lengthy answer. After all, next to valuing businesses, analyzing economic moats is what we spend the most time on here at Morningstar--and not all decisions are as clear cut as  Microsoft (MSFT) (with a very wide moat) or  Ford (F) (with an utterly nonexistent moat.) So here's your primer on how we do it, from the kinds of data we look at to how we weigh various factors, along with some examples of moat ratings that might seem odd without knowing our underlying logic. (Special note: During's Premium Stock Research Week--through Oct. 30--you are invited to view all of's Stock Analyst Reports, including our moat ratings, free of charge. Click here for more information.)

Pat Dorsey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.