Economic Moats

What protects a company's profits.

An economic moat is a durable advantage that protects a company from competitors. It is the reason its high profits don't get competed away. Moats are qualitative, but they show up in the numbers as consistently high ROE and stable margins over many years. Brand Customers pay more for a trusted name. Cost advantage Makes things cheaper than rivals can. Network effect Each new user makes the product more valuable. Switching costs Painful for customers to leave. Numbers tell you a company has been good; a moat tells you whether it can stay good. Both matter.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Valuation.