Chuck E. Cheese's mousy earnings

I was checking out some of the big stock gainers from Wednesday and came across CEC Entertainment (NYSE: CEC). Good ole Chuck E. Cheese's saw its stock rally more than 24%. I decided to check out the restaurant chain's earnings report to see if the quality of the numbers equaled the enthusiasm of the market.

Gee, some of the data look like cold, leftover slices of pizza to me. Same-store sales declined 2.7% and 1.4% for the fourth quarter and full fiscal year, respectively. Total revenue for the quarter was flat at approximately $175 million, and up only around 2% to $785 million for the year. CEC reported a loss of $0.02 per diluted share for the quarter; for the year, diluted earnings per share came out to $1.76, a number which compared unfavorably to the $2.04 per diluted share booked in 2006.

There were items affecting the GAAP scenario, but for me, the top-line picture seems quite bleak. Apparently Wall Street was enamored by CEC's outlook for 2008 earnings to fall somewhere in a range between $2.15 and $2.25 per share. If the company hits the high end of that guidance, I suppose the stock might look cheap. In addition, the free cash-flow statement showed that the green stuff rose 61% by management's calculation. So, yes, CEC should probably be looked at; however, I'm not inclined to put money to work here, especially after yesterday's run-up in the share price.

I haven't been in a Chuck E. Cheese's restaurant in many, many years. I'd like to visit one soon and see how things have changed. For now, though, I'll take a wait-and-see approach on CEC in terms of its stock. I mean, there are better restaurant brands out there, am I right? Companies like McDonald's (NYSE: MCD), Burger King (NYSE: BKC), and Yum! Brands (NYSE: YUM) would be stocks I'd look to first before CEC, at least at this time.