How to Score and Compare Competitive Moats Across Companies

Written by Jim Norris · NorrisAI AlphaLens · Updated August 2026

Quick answer: Moat strength isn't binary — it exists on a spectrum from no moat (profits quickly competed away) to wide moat (sustainable competitive advantage for 10+ years). Scoring and comparing moats across companies requires evaluating the source of the advantage, its durability, its breadth across the business, and whether it's widening or narrowing. A structured scoring approach prevents the common mistake of treating vague competitive claims as genuine moats.

Why scoring matters

Saying a company "has a moat" without specificity isn't useful for investment decisions. The key questions are: how strong is the moat relative to direct competitors, how long is it likely to last, and does the current valuation reflect it appropriately?

A structured scoring approach forces you to be explicit about what the advantage actually is, test it against the most realistic competitive threats, and compare it directly to peers rather than in isolation.

The five dimensions to score

1. Source strength (1–5)

How compelling is the structural basis of the advantage?

• 5: Multiple reinforcing moat sources (brand + switching costs + network effects)
• 4: One strong, clearly identifiable moat source
• 3: Meaningful but somewhat replicable advantage
• 2: Marginal advantage that's being eroded
• 1: No clear structural advantage — competing on execution alone

2. Durability (1–5)

How long is the advantage likely to last?

• 5: 20+ year runway with no clear technology or competitive threat visible
• 4: 10–15 year runway with manageable threats
• 3: 5–10 year runway — advantage visible but threats are real
• 2: 2–5 year runway — advantage is narrowing
• 1: Advantage is already being significantly eroded

3. Breadth (1–5)

How much of the business does the moat protect?

• 5: Entire business is protected
• 4: Core business is protected, some segments are more competitive
• 3: Core product is protected but adjacencies are vulnerable
• 2: Moat protects a shrinking portion of revenue
• 1: Narrow moat in a small part of a largely commoditized business

4. Direction (1–5)

Is the moat widening or narrowing?

• 5: Clearly widening — market position and margins expanding
• 4: Stable with slight widening
• 3: Stable
• 2: Gradually narrowing
• 1: Clearly narrowing — competitors gaining ground, margins compressing

5. Relative strength vs peers (1–5)

How does this moat compare to the closest competitors?

• 5: Materially stronger than all direct peers
• 4: Stronger than most peers
• 3: Roughly equivalent to peers
• 2: Weaker than leading peers
• 1: Among the weakest in the competitive set

Professor Michael Porter of Harvard Business School argues that sustainable competitive advantage requires performing different activities than rivals or performing the same activities in a fundamentally different way — and that the test of any claimed advantage is whether competitors could replicate it at acceptable cost and time. Scoring forces this test explicitly. — Competitive Strategy, Harvard Business School Press

Interpreting total moat scores

Total score out of 25:

• 20–25: Wide moat — exceptional competitive position, commands premium valuation
• 14–19: Narrow-to-moderate moat — meaningful advantage, warrants above-average valuation
• 8–13: Marginal moat — some advantage, but pricing power limited
• Below 8: No meaningful moat — value in assets or execution only

Warren Buffett has said that in business, he looks for economic castles protected by unassailable moats — and that the strength of the moat, not the current earnings level, is what determines the long-term investment value of a franchise business. A high moat score earned through rigorous analysis is one of the strongest signals for long-term holding conviction.

How AlphaLens evaluates moat scores

The Bull vs Bear + Moat Analysis (framework #2) applies exactly this structured approach — scoring each moat dimension, identifying the strongest and weakest elements of the competitive position, and comparing the result directly to the company's closest peers through the Competitor Moat Comparison (framework #11). The result is a quantified view of moat strength that feeds directly into the Fair Value Stress Test's assumption about long-term margin sustainability.

Where to go deeper

For a detailed walkthrough of each research framework, see the complete guide to all 15 AlphaLens frameworks.

For definitions of investing terms, see the AlphaLens investing glossary.