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 Kimberly-Clark (NYSE: KMB) -- he hasn't specifically mentioned anything about it to me -- he's left us some clues about whether it's the sort of stock that might interest him. Answering that question could also reveal whether it should interest us.

In his 10-K filings, Buffett lays out the qualities he looks for in an investment. In addition to adequate size 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 Kimberly-Clark 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 Kimberly-Clark's earnings and free cash flow history:

Editorial

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

Kimberly-Clark's earnings and free cash flow have remained fairly stable over the past few years.

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 put them in context:

Company

Debt-to-Equity Ratio

Return on Equity (LTM)

Return on Equity (5-year average)

Kimberly-Clark 105% 33% 31%
Procter & Gamble (NYSE: PG) 50% 17% 17%
Wausau Paper (NYSE: WPP) 49% 15% 5%
Energizer (NYSE: ENR) 108% 19% 46%

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

Kimberly-Clark generates very high returns on equity, though it employs a fair amount of debt.

3. Management
CEO Thomas Falk has been at the job since 2002, and he's served in other roles with the company for many years.

4. Business
Personal-care and paper products aren't particularly susceptible to technological disruption.

The Foolish conclusion
Whether or not Buffett would ever invest in Kimberly-Clark -- and his large stake in Procter & Gamble might make him somewhat disinclined to do so -- we've learned that it exhibits many of the characteristics of a quintessential Buffett investment. It enjoys consistent earnings, high returns on equity (albeit with some debt), a straightforward industry, and tenured management.

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Ilan Moscovitz doesn't own shares of any company mentioned. Energizer Holdings is a Motley Fool Inside Value selection. Energizer Holdings is a Motley Fool Stock Advisor pick. Kimberly-Clark and Procter & Gamble are Motley Fool Income Investor recommendations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.