What does the moat score measure?

The moat score evaluates how durable the competitive advantage is — whether the business can defend its profits over time. It weighs network effects, switching costs, cost advantages, intangible assets, efficient scale, ROIC sustainability, and signs of moat erosion. A high moat score is the precondition for almost every other dimension carrying its full weight.

How is valuation scored?

The valuation score asks whether the current price is justified by the business fundamentals and what growth rate the market is pricing in. It uses reverse-DCF, fair value versus margin-of-safety price, achievable versus implied growth, historical valuation context, catalysts, and supply-demand dynamics. A reverse-DCF is the sharpest single lens — it exposes the assumption the price is buying.

How does the methodology weight different investment styles?

The same six dimensions are scored uniformly; the weighting changes by style. Fundamental investing (long-term compounder lens) carries equal weight across all six categories. Growth investing weights Optionality & Growth and disruption highest. Active stock picking emphasises catalysts, expected return, and risk/reward over a twelve-month horizon. The underlying scores never change — only the aggregation does.

Are the scores investment advice?

No. Scores are analytical signals, not investment advice. They cannot capture management character in private, regulatory surprises, macro shifts, or black swan events. Use the scores as a starting point for your own research, not as the final word. Form your own thesis, define your own kill criteria, and consult a qualified financial adviser before investing.

INVESTBOARD

Value investing · scoring methodology

How we score companies.

Six dimensions, five mental models, one transparent framework — so you can see exactly what drove every score on your board.

Overview.

Six dimensions · five mental models

Every company on your board is evaluated across six dimensions, each scored 0–10. The analysis draws on SEC filings, financial statements, earnings call transcripts, market data, and competitive intelligence. Five mental models are applied throughout: first principles thinking, inverse thinking, second-order effects, pattern recognition, and deferred gratification analysis.

Investment style weighting.

Lens shifts the weights · same six dimensions

Equal weight · max 60

Fundamental investing

Six categories carry the same weight. Long-term compounder lens.

Growth + disruption · max 80

Growth investing

Growth potential (25%) and disruption (25%) weighted highest. Optionality matters most.

Catalysts + reward · max 40

Active stock picking

Catalysts, expected return, and risk/reward emphasised. Twelve-month horizon.

Scoring categories.

Six dimensions · weighted by lens

Competitive Moat

How durable is the competitive advantage? We evaluate whether the business can defend its profits over time.

·Network effects — does the product become more valuable as more people use it?

·Switching costs — how painful is it for customers to leave?

·Cost advantages and economies of scale vs competitors

·Intangible assets — brands, patents, regulatory licenses

·Efficient scale — does the market naturally limit competition?

·ROIC sustainability — is return on capital backed by real structural advantage or temporary?

·Moat erosion signals — are competitors gaining ground or is the moat widening?

Management Quality

Capital allocation skill, alignment with shareholders, and long-term orientation. Actions over words.

·Capital allocation track record — ROIC trend over time, not just current level

·Insider ownership — do executives have meaningful skin in the game (5%+)?

·CEO compensation relative to company size and performance

·Candor and transparency — do they openly discuss problems and mistakes?

·FCF/Debt ratio — prudent debt management and financial conservatism

·Deferred gratification — choosing long-term value over short-term earnings beats

·Adaptiveness — proactive change leadership, not just reacting to disruption

·ROE stability — consistent returns, not deteriorating over time

Valuation

Is the current price justified by the business fundamentals? What growth rate is the market pricing in?

·Reverse DCF — what growth rate does the current stock price imply?

·Fair value vs margin of safety price using 10-year DCF model

·Achievable growth rate vs implied rate — is the market under- or over-pricing growth?

·Historical valuation context — P/E, P/S, P/FCF vs own history and peers

·Strategic catalysts that could drive multiple expansion over 5-10 years

·Supply-demand dynamics — structural demand shifts can override traditional valuation

Business Model

Economic durability and cash generation power. Can this business compound capital efficiently?

·Gross margin, operating margin, and net margin trends over time

·ROIC and ROE — does the company earn above its cost of capital?

·Free cash flow generation consistency and growth

·Revenue and earnings CAGR (3-year and 5-year)

·Capital intensity — light-asset models compound better

·Reinvestment rate and reinvestment runway for growth

·Stock-based compensation as % of revenue — real dilution cost

Risk Assessment

What could permanently impair capital? Inverse thinking — how could this investment fail?

·Net debt relative to free cash flow — can the company service its debt?

·Financial health — liquidity, interest coverage, cash position

·Competitive threats — are challengers eroding market share?

·Regulatory and geopolitical exposure

·Technology disruption risk — could the core business become obsolete?

·Customer and revenue concentration

·Second-order effects — what happens downstream if key risks materialize?

Optionality & Growth

Hidden upside beyond the core business. Future growth vectors that the market may be underpricing.

·Adjacent market opportunities and total addressable market expansion

·Platform and ecosystem leverage — can one success unlock many?

·R&D pipeline and innovation track record

·International expansion potential

·Real options value — what valuable bets does the company hold?

·Management vision for 5-10 year horizon

Data sources.

Publicly available · numbered citations

All analysis is grounded in publicly available data: SEC filings (10-K, 10-Q, 8-K) via EDGAR, earnings call transcripts, quarterly financial statements, market pricing data, insider transaction records, and analyst estimates. Every analysis includes numbered source citations that link to original documents, so you can verify any claim.

Limitations.

What scores can't capture

Scores are analytical signals, not investment advice. They cannot capture everything — management character in private, regulatory surprises, macro shifts, or black swan events. Use scores as a starting point for your own research, not as the final word. Always form your own thesis and define your own kill criteria before investing.

From the writing

The circle of competenceBuffett's most quoted concept, made operational — the three tests that filter whether a position is inside the circle or outside.Optionality, the hidden upsideHow to spot the second business inside a great business before the segment shows up in the income statement.The value-trap checklistSix red flags every cheap-looking stock should clear before you size — and what distinguishes a real turnaround from a falling knife.