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

While we can't know for sure whether Buffett is about to buy UTX (NYSE: UTX) -- 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 UTX 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 UTX’s earnings and free cash flow history:

Utx

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

Over the past five years, UTX has generated fairly consistent earnings.

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

Return on Equity (LTM)

Return on Equity (5-year average)

United Technologies

45%

22%

23%

Boeing (NYSE: BA)

292%

96%

106%

Honeywell (NYSE: HON)

65%

21%

19%

Northrop Grumman (NYSE: NOC)

31%

17%

8%

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

UTX produces fairly high returns on equity while employing reasonable levels of debt.

3. Management
CEO Louis R. Chênevert has been at the job since 2008. He’s had executive experience at UTX for over a decade.

4. Business
The defense industry requires constant research and development, and is somewhat susceptible to technological disruption.

The Foolish conclusion
Regardless of whether Buffett would ever buy UTX, we've learned that the company exhibits many of the characteristics of a quintessential Buffett investment: consistent earnings, fairly high returns on equity with limited debt, and a straightforward business.

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Ilan Moscovitz doesn’t own shares of any companies mentioned. You can follow him on Twitter @TMFDada. The Motley Fool owns shares of Northrop Grumman. Motley Fool newsletter services have recommended. 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.