Buffett's Hardcore Stock Screening Method Predictability of Earnings: Has profit consistently grown over the past 10 years? One decline is allowed, but it must be less than 45%. Debt Level: Is long-term debt less than or equal to 5 times earnings? Return on Equity (ROE): Is it greater than 15%? Return on Capital (ROC): Is the return on invested capital greater than 12%? Free Cash Flow: Is it positive? And can it cover capital expenditures? Use of Retained Earnings: Is the return on retained earnings greater than 12%? This method evaluates multiple dimensions like earnings, debt, return on capital, and free cash flow, filtering layer by layer to ensure the companies you invest in have strong growth potential and solid financial health. “If you’re not willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” — Warren Buffett