Moat evidence

What it measures¶

A moat is a lasting competitive advantage — a brand, a network, a cost lead — that keeps competitors from eroding a company's returns, as a moat protects a castle. The panel measures it by its result: returns above the cost of capital that persist. It shows:

• the spread of ROIC against WACC across the stored years, and whether it is widening, stable or narrowing;
• two named tests, each passed or failed: ROCE above 20% (return on capital employed) and cash conversion above 95% (operating cash flow ÷ net income).

Why it is on the page¶

One good year proves nothing about an advantage; a return that stays above the cost of capital for years is the trace an advantage leaves. The two tests add a check that the returns are high in absolute terms and are paid in cash.

Thresholds, their source and the population they were fitted on¶

• Fitted on: no statistical sample — practitioners' lines.
• Evidence grade: practitioner convention.

The panel issues no moat rating: the spread's direction and the two tests are shown separately, because a widening spread with one failed test is itself the finding.

A worked example¶

Celestica, as the Fundamentals page showed it on 9 August 2026: the spread widened from 2.57 to 28.67 points over four years; ROCE was 31.64% — passed; cash conversion was 79.22% — failed, since about a fifth of the reported profit had not yet turned into cash during a growth spurt.

What “No verdict” means here¶

The panel carries no verdict of its own. A test reads insufficient data when its inputs are missing; the spread trend needs at least three stored years.

What the verdict is and is not¶

The panel describes how returns have behaved, not why. It cannot see the advantage itself and says nothing about how long it will last. It is not a forecast and not an instruction to trade the shares.