The fourth-quarter earnings report from Applebee's (NASDAQ:APPB) couldn't be more timely -- it comes when many people are mulling the possibility that the company could be sold.

Fourth-quarter net income came in 10% lower at $18.5 million, or $0.25 per share. If you back out impairment and restaurant-closure costs and stock-based compensation, earnings were $23.7 million, or $0.32 per share. Also bear in mind that the fourth quarter this year had an extra week, which benefited the company's earnings by $0.05 per share.

Applebee's revenues increased 9% to $342 million, also including an extra week in the fourth quarter this time around; without it, they would have increased 6.8%. Systemwide domestic same-store sales decreased 1.1%.

Unfortunately, unlike last year's fourth-quarter and year-end press announcement, Applebee's didn't include a balance sheet or cash flow statement this time around (boo!), although it said that it will file its Form 10-K with the SEC within the next two weeks. So be on the lookout if you're following this company. However, Applebee's did reveal a few numerical tidbits in its conference call.

Applebee's cash improved to $22 million, a 65% increase over last year. Debt decreased by 3% to $175 million. However, its free cash flow generation dropped 37% to $51.7 million on a year-over-year basis.

The results beat analysts' expectations for the quarter, but I'd say there are plenty of reasons to temper the euphoria, not the least of which is that the stock leapt earlier this week on news that the restaurant company is exploring strategic alternatives. Meanwhile, as part of that initiative, Applebee's has stopped giving guidance, since future initiatives could change the situation.

Furthermore, the Applebee's conference call didn't include a Q&A session, since it now can't comment on future plans; when I read the transcript it felt a bit like a drive-by conference call. At any rate, management reiterated how difficult it has been for the casual-dining landscape -- although some of Applebee's issues seem to be uniquely its own, considering that its results have lagged for quite some time. Management said 2007 is a year for Applebee's to focus on "continued improvement of our food, evolution of our advertising, and a greater emphasis on communicating our value proposition to our guests."

It's been duly noted that Applebee's faces a great deal of competition from other casual-dining restaurant chains; some might wonder whether it's really that different from other restaurants like Ruby Tuesday (NYSE:RI), which provide burgers and other such American fare, and any of the usual suspects you might find on the suburban strip. Darden's (NYSE:DRI) Olive Garden or Brinker's (NYSE:EAT) Chili's, for example, both provide viable options for hungry consumers. And, of course, there's the macro environment in which some consumers just aren't eating out as much.

Applebee's still has a lot of work to do, and even though some celebrated the idea that it might get snapped up, there are a lot of uncertainties and no guarantees. I, for one, would rather sit on the sidelines and watch what transpires than buy into Applebee's now.

For related Foolishness, dig into the following Foolish articles:

If you're looking for value-priced investment ideas, why not take a 30-day free trial to Motley Fool Inside Value? Philip Durell identifies new bargains every month for value-oriented investors.

Alyce Lomax does not own shares of any of the companies mentioned.