Overview

The sustainability of a firm’s long-term competitive advantage is the most important factor to evaluate its stock based on fundamental analysis. Morningstar calls this an “Economic Moat” to represent the defensive power that a firm retains against its competitors. This lecture covers the elements that constitute Moat and specific examples. Morningstar analysts rank companies by three levels, Wide Moat, Narrow Moat, and No Moat. Their independent research methodology is a live example of the equity analysis that we all learned in CFA program.