CEC Entertainment (NYSE:CEC), owner of the Chuck E. Cheese children's restaurants, updated investors Wednesday after announcing preliminary full-year earnings for 2006. It also offered details about its investigation into its stock option-granting process. Let's hope this refocuses management on the task at hand -- growing sales and cash flow.

In a nutshell, the options issue is proving no big deal, and CEC is again seeing steady yet unspectacular growth. Sales and earnings advanced about 6% for the year, while same-store sales grew 2.7%. However, the results are not yet official, because the company's auditors and audit committee have yet to sign off on the options investigation adjustments.

CEC's earnings press release offered details on what those adjustments are expected to look like, and they don't seem to be major. From what's listed, 2005 earnings will increase a couple of percent, while the prior two years' will decrease only up to 1%. Shareholders are hoping the case will be closed soon, and the company will be able to file audited financials and juicy cash flow details.

CEC has a solid track record of operating cash flow generation and, even after subtracting capex to maintain and grow the store base, posts ample free cash flow with which to repurchase shares. Growth could be picking up, too. Based on current management guidance, bottom-line expansion will return to the double digits in 2007 as store comps advance 2.5%-3%.

Yet total sales growth could remain muted. CEC plans to open only 10 stores this year, or a couple percent more than the current store count of 529. I like the conservative approach, but at nearly 20 times forward earnings, there's a fair amount of growth expectations already baked into the stock price. In the company's defense, growth prospects look ample. The latest 10-K available highlights that management has its eye on as many as 200 additional store locations.

Additionally, stronger sales trends at existing stores are picking up, judging by the positive comps, and an end to options-related matters could refocus management on further boosting operating results. I happen to like CEC's position in the crowded restaurant space: In addition to food, it caters to children, while non-food gaming and merchandise revenue accounts for about a third of total sales.

This helps differentiate it from pure fare providers such as Applebee's (NASDAQ:APPB), O'Charleys (NASDAQ:CHUX), and Ruby Tuesday (NYSE:RI). CBRL Group (NASDAQ:CBRL) has a similar strategy with its Cracker Barrel restaurants and attached Old Country Stores. So while the additional product focus adds another layer of complexity, it can be worth it, since the captive restaurant audience frequently spends its dollars on retail and gaming offerings and vice versa. I'd be a buyer if CEC could find a way to upgrade its growth prospects another level.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.