Warren Buffett attracts a lot of attention. As the world's third-richest person and most celebrated investor, thousands try to glean what they can from his thinking processes and track his investments.

While we can't know for sure whether Buffett is about to buy CBS (NYSE: CBS) -- he hasn't specifically mentioned anything about it to me -- we can discover whether it's the sort of stock that might interest him. Answering that question could also inform whether it's a stock that should interest us.

In his most recent 10-K, Buffett lays out the qualities he looks for in an investment. In addition to adequate size, proven management, and a reasonable valuation, he demands:

  1. Consistent earnings power.
  2. Good returns on equity with limited or no debt.
  3. Management in place.
  4. Simple, non-techno-mumbo-jumbo businesses.

Does CBS meet Buffett's standards?

1. Earnings power
Buffett is famous for betting on a sure thing. For that reason, he likes to see companies with demonstrated earnings stability.

Let's examine CBS' earnings and free cash flow history:

Source: Capital IQ, a division of Standard & Poor's. Free cash flow is adjusted based on author's calculations.

Over the past five years, CBS' earnings have shrunk somewhat. (The massive loss in 2008 was largely due to a noncash write-down due to the recession.)

2. Return on equity and debt
Return on equity is a great metric for measuring both management's effectiveness and the strength of a company's competitive advantage or disadvantage -- a classic Buffett consideration. When considering return on equity, it's important to make sure a company doesn't have an enormous debt burden, because that will skew your calculations and make the company look much more efficient than it actually is.

Since competitive strength is a comparison between peers, and various industries have different levels of profitability and require different levels of debt, it helps to use an industry context.

Company

Debt-to-Equity Ratio

Return on Equity (LTM)

Return on Equity (5-year average)

CBS Corporation

61%

10%

(11%)

News Corp. (NYSE: NWSA)

53%

11%

7%

Time Warner Cable (NYSE: TWC)

271%

16%

(1%)

Viacom (NYSE: VIA-B)

70%

0%

17%

Source: Capital IQ, a division of Standard & Poor's.

CBS produces moderately low returns on equity with a moderate debt load.

3. Management
CEO Leslie Moonves has been at the job since 2005. He's worked in the television industry for decades.

4. Business
The television industry, like much of the "old media," faces some challenges as viewers and advertisers move increasingly to newer media over the Internet. Despite holding onto his stakes in newspapers, Buffett is concerned about that segment of traditional media's ability to adapt to changing times.

The Foolish conclusion
Regardless of whether Buffett would ever buy CBS, we've learned that while it has tenured management, it doesn't particularly exhibit some of the other quintessential characteristics of a Buffett investment: consistent earnings, high returns on equity with limited debt, and a straightforward industry.

If you'd like to stay up-to-speed on the top news and analysis on CBS or any other stock, simply click here to add it to your stock watchlist. If you don't have one yet, you can create a watchlist of your favorite stocks by clicking here.