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

We can't know for sure whether Buffett is about to buy Coinstar (Nasdaq: CSTR) -- he hasn't specifically mentioned anything about it to me -- but we can discover whether it's the sort of stock that might interest him. Answering that question could also reveal whether it's a stock that should interest us. In this series, we do just that.

Writing in a 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.

Although the company is probably too small for Buffett to actually buy, does Coinstar 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 Coinstar's earnings and free cash flow history:

Source: S&P Capital IQ.

It's quite an impressive picture: over the past five years, Coinstar's earnings and free cash flow have become profitable and grown dramatically.

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 is.

Coinstar's return on equity has been steadily rising from 6.1% in 2006 to 23.6% today as the company increases scale. Its debt-to-equity ratio is a moderate 71%.

3. Management
CEO Paul Davis has been at the job since 2009. He has worked for several decades in the packaged goods and consumer retail businesses at companies like Frito-Lay, Procter & Gamble, and Kettle Foods before coming to Coinstar.

4. Business
The video rental business has been undergoing extreme technological disruption over the past several years, as more inventory-light companies like Netflix and Coinstar have outcompeted established players like Hollywood Video and Blockbuster. With consumers increasingly choosing to stream video, industry dynamics continue to change.

The Foolish conclusion
So is Coinstar a Buffett stock? Probably not. The company does have growing earnings, as well as high returns on equity with more-or-less limited debt. However, given that we're talking about such a recently profitable company with fresh leadership in a rapidly changing industry, there would probably be too many unknowns for Buffett. However, if you're interested in another retailer that our top analysts and chief investment officer picked to beat the market, you can check out The Motley Fool's top stock for 2012. I invite you to download this special report for a limited time by clicking here -- it's free.

Ilan Moscovitz doesn't own shares of any company mentioned. Motley Fool newsletter services have recommended buying shares of Netflix, Procter & Gamble, and Coinstar. 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.