A moat is a durable competitive advantage: the thing that stops a competitor copying a business and competing its profits away. Everybody agrees it matters and nobody can measure it directly, so the standard approach is to look for its footprints in the numbers. We went looking, and the interesting part turned out to be where the footprints lie.
The Corporate Finance Institute sets out three quantitative indicators. Return on invested capital consistently above the weighted average cost of capital, so the business earns more than its funding costs. Gross margins that are high and stable over time. And free cash flow that grows consistently.
Note how much of that is about persistence rather than level. A single good year is not a moat; a decade of them starts to look like one.
Now compare that with what we hold. We do not have invested capital, so no ROIC. We do not have cost of capital, so no WACC comparison. We do not have free cash flow. What we have is return on equity, gross margin, and one snapshot of each.
So this is an approximation of one and a half of three indicators, at a single point in time. Saying so first is not false modesty: it determines how much the rest of this page is worth.
Taking return on equity above 15 per cent and gross margin above 40 per cent as the crude test:
The sector pattern is stark, and it is the first sign that the test is measuring something other than quality.
| Sector | Pass both | Companies | Rate |
|---|---|---|---|
| Technology | 32 | 70 | 46% |
| Communication Services | 25 | 54 | 46% |
| Healthcare | 31 | 69 | 45% |
| Consumer Defensive | 16 | 56 | 29% |
| Industrials | 34 | 138 | 25% |
| Consumer Cyclical | 21 | 85 | 25% |
| Basic Materials | 13 | 60 | 22% |
| Financial Services | 22 | 146 | 15% |
| Energy | 6 | 40 | 15% |
| Utilities | 4 | 48 | 8% |
| Real Estate | 2 | 35 | 6% |
Technology, communication services and healthcare clear the bar at around 45 per cent. Utilities manage 8 per cent and real estate 6 per cent. That is not a finding about which industries have durable advantages. It is a finding about which industries have asset-light income statements, which is a different thing wearing the same clothes.
294 companies clear one bar and fail the other, and both directions are instructive.
High margin, low return. These look wonderful on margin alone and are nothing of the sort.
| Company | Market | Gross margin | ROE | Sector |
|---|---|---|---|---|
| Merlin Properties | IBEX 35 | 100.0% | 9.9% | Real Estate |
| National Grid | FTSE 100 | 100.0% | 8.4% | Utilities |
| Power Assets | Hang Seng | 100.0% | 7.0% | Utilities |
| Colonial | IBEX 35 | 99.0% | 5.4% | Real Estate |
Low margin, high return. These fail a margin screen and include some of the most durable businesses on the list.
| Company | Market | Gross margin | ROE | Sector |
|---|---|---|---|---|
| Boeing | S&P 100 | 4.7% | 173.5% | Industrials |
| Lockheed Martin | S&P 100 | 11.8% | 89.2% | Industrials |
| Caterpillar | S&P 100 | 28.6% | 51.3% | Industrials |
| TJX | S&P 100 | 31.4% | 61.2% | Consumer Cyclical |
| Home Depot | S&P 100 | 33.1% | 128.4% | Consumer Cyclical |
This second table is the more important one, and it is the trap Buffett himself pointed at. Cost leaders win by being cheaper, not by charging more, so thin margins are the strategy working rather than failing. A screen that demands fat margins throws out an entire category of moat. Our methodology page has said as much since we set the Buffett threshold, and this is what it looks like in the data.
Fifteen of the 844 companies report a gross margin of exactly 100.0 per cent. That is not a measurement. Yahoo returns gross profit equal to total revenue when the cost line is absent, and the margin computes to 100 per cent by arithmetic rather than by economics.
National Grid is the clearest case: revenue of 17.69 billion and a reported gross profit of 17.69 billion. An electricity network has costs. For banks and payment networks the same equality reflects how their income statements are structured rather than an error, but either way the number is not comparable with Apple's measured 47.9 per cent, and it should never be read as a wider moat.
Eleven companies report a return on equity above 100 per cent. Rolls-Royce shows 623 per cent, on a book value of 0.326 per share against a share price of 1390. That is what happens when years of write-downs and buybacks shrink the denominator towards zero. Apple's 141 per cent has the same cause in a milder form. A very high ROE is often a statement about a company's equity base, not about its profitability.
Both distortions push in the same direction, which is upward, and they land hardest exactly where a reader is most likely to look: the top of the list.
We should be plain about the consequence for our own rankings. The Buffett lens weights return on equity most heavily and gross margin second, so those fifteen and those eleven companies are being flattered by our ranking too. It affects roughly 2 per cent of the universe rather than the shape of the whole list, but the honest thing is to say it here rather than let someone discover it.
Everything above is a photograph. The framework asks for a film.
A company earning 25 per cent on equity this year tells you very little. A company that has earned above 20 per cent every year for a decade, through a recession, while its competitors could not, tells you a great deal, and it is the second statement that describes a moat. We cannot make it yet, because until very recently this site stored nothing at all.
That changed on 29 July 2026, when we started keeping a daily record of every figure behind these rankings. It does not help this article. It means that in a few years the question can be asked properly, and that free cash flow, which we do not currently collect but which our data source does provide, is the obvious next thing to add.
Our honest answer is that we can hand you 206 companies that are currently profitable and currently price their products well, and that this is a starting list for reading rather than a verdict. Some of them earn those numbers through a genuine advantage. Some are at a cyclical peak. At least fifteen are there because of a missing line in a spreadsheet.
Which is which is not a question a screen answers. It is the question a screen is for.
Corporate Finance Institute, "Economic Moats: Competitive Advantage in Corporate Finance" (corporatefinanceinstitute.com). Source for the three quantitative indicators: ROIC consistently above WACC, high and stable gross margins over time, and consistent free cash flow growth. It sets no minimum number of years, and this article does not claim one on its behalf.
SageRanks measurement, 29 July 2026. 844 companies across 30 indices, of which 801 report both a return on equity and a gross margin. Sector rates are calculated over companies reporting both. Underlying figures from Yahoo Finance via our own pipeline; the 100 per cent margins and the above-100 per cent returns on equity were traced back to the reported fields and are described above. Weightings and known deviations are on the methodology page.
A third source, an S&P Global paper on identifying economic moats systematically, is not cited here because we could not retrieve it to check what it says. We would rather leave a gap than cite something we have not read.