A share repurchase program typically indicates an investor-friendly management team, but this is also a double-edged sword. If the repurchase program is not matched by strong growth in key financial metrics such as revenue, earnings, and comparable-store sales, then it could be seen as an attempt to cover up dismal performance.

Let's see if this is the reason behind the stand-off between hedge fund Sandell Asset Management and Bob Evans Farms (BOBE). We will also take a look at how Bob Evans has performed in comparison with peers Cracker Barrel Old Country Store (CBRL 0.91%) and DineEquity (DIN 0.94%), and whether any of them could be good buys.

Buybacks won't help Bob Evans for long
During the second quarter of fiscal 2014, Bob Evans bought back 1.2 million shares worth $68.6 million. The company also extended its current share repurchase authorization by an additional $50 million, bringing it to a total of $225 million . However, none of these initiatives could keep Sandell Asset Management at bay. Sandell blames Bob Evans' management for disappointing performance and wants a change of board.

Bob Evans posted a lackluster second quarter and missed Street estimates on earnings. Earnings declined 34% year-over-year to $0.36 per share. An increase in input costs pressured margins and macroeconomic headwinds also played a part in the company's woeful performance. The company underlined that $0.23 per share of the shortfall in earnings was due to sow costs alone .

During the second quarter, Bob Evans posted adjusted net sales of $332.6 million, up 1% from last year. Revenue grew on the back of 10.6% growth in the BEF Foods segment, which was offset by a 2.4% year-over-year decline at Bob Evans Restaurants. Consolidated comps declined 1.9%. The restaurant's segment sales were down due to closure relating to the implementation of the company's Farm Fresh Refresh renovation program.

Going forward, Bob Evans has lowered the higher end of its fiscal 2014 earnings outlook. Bob Evans now expects earnings per share in the range of $2.60-$2.65 versus its prior guidance range of $2.60-$2.67 per share. This is after considering the impact of the share repurchase program which would contribute $0.09-$0.11 per share to earnings.

This means that the company is aiming for earnings-per-share growth through share repurchases during fiscal 2014.

A big contrast
On the other hand, DineEquity posted a solid third quarter as it bested all expectations. The owner of national chains Applebee's and IHOP posted adjusted earnings of $1.10 per share and beat the Street's average estimate by $0.18 per share .

IHOP's comps were positive for the second consecutive quarter, increasing 3.6%. Third-quarter sales improved on the back of a higher average guest check, largely due to favorable changes in the product mix. DineEquity is moving toward a franchise-driven business model and as a result of refranchising activity, net revenue declined 25% versus the same quarter a year earlier to $161 million .

DineEquity has formed a joint venture with ESPN, which is owned by Walt Disney, to introduce ESPN Fan Zones at Applebee's restaurants across the country. The remodeling initiative is expected to be completed by the end of 2014. These moves should help DineEquity further improve its performance in the future.

Cracker Barrel's fine showing
Cracker Barrel Old Country Store is in the same league as Bob Evans. It has an impressive footprint as an interstate restaurant with a gift shop. Cracker Barrel was off to a solid start in fiscal 2014. Its first-quarter results represented the eighth consecutive quarter of positive comps and outperformed the Knapp-Track casual dining index in terms of sales and traffic .

Despite the negative impact of the government shutdown in October, revenue in the quarter jumped 3.5% to $649.1 million from last year. Consolidated comps grew 2.5%. Adjusted net income came in at $1.22 per diluted share, compared with $1.08 in the prior year quarter.

Looking forward, the company is focusing on higher per-store productivity through an expanded retail product mix and the introduction of licensed products. Also, it is venturing outside the doors of its restaurants through licensing arrangements.

Takeaway
A look at the stock performance of the three shows that Cracker Barrel has offered the highest return year-to-date with not much difference from the other two. However, Bob Evans yields 2.4% which compares with Cracker Barrel's 2.6% and DineEquity's 3.6%.

Bob Evans has seen a major drop in earnings and it is more reliant on share buybacks to grow earnings. On the other hand, both Cracker Barrel and DineEquity have been performing well and they have some good moves up their sleeves that could help them get better in the future. Hence, investors should be staying away from Bob Evans as it has been artificially growing its earnings and instead consider either DineEquity or Cracker Barrel for their portfolios.