Stock Movers: Costco, Dell, Red Robin (Podcast)

Costco reported better-than-expected earnings per share of $4.28 for its third quarter, indicating resilience amidst economic challenges. Dell Technologies raised its fiscal year earnings outlook to $9.40 per share, exceeding analyst estimates, driven by increased server orders for AI networks while reiterating its $103 billion sales forecast. Red Robin's first-quarter adjusted earnings per share surpassed estimates, projecting second-quarter Adjusted EBITDA between $13 million and $16 million, though forecasting a decline in comparable restaurant sales of approximately 3%.

Analysis

Costco Wholesale Corp. (COST) demonstrated robust financial health in its third quarter, reporting earnings per share of $4.28, surpassing Wall Street expectations. This performance underscores Costco's ability to leverage its scale and loyal customer base to effectively manage economic headwinds, including tariffs, and sustain business growth even as consumers prioritize necessities. Dell Technologies Inc. (DELL) presented a positive outlook, raising its fiscal year 2026 earnings guidance to approximately $9.40 per share, an increase from its February forecast and above the analyst consensus of $9.21, signaling strong profitability driven by a notable surge in orders for servers essential for AI networks; the company also reaffirmed its annual sales forecast at roughly $103 billion. Conversely, Red Robin Gourmet Burgers Inc. (RRGB) reported a mixed performance; while its first-quarter adjusted earnings per share exceeded analyst estimates and it provided a Q2 fiscal 2025 Adjusted EBITDA forecast between $13 million and $16 million, the company anticipates a challenging revenue environment, projecting a decline in comparable restaurant sales of approximately 3% for fiscal 2025, attributed in part to a non-recurring benefit from a 2024 loyalty program change creating a 240 basis point headwind.

Key Decisions for Investors

• Given Costco's strong earnings beat and demonstrated resilience in navigating economic turbulence, investors might consider its consistent execution and defensive positioning favorable.
• Dell's upward revision of its earnings outlook, fueled by significant demand for AI-related server infrastructure, suggests a strong growth catalyst that warrants close investor attention to its market capture in this segment.
• For Red Robin, despite a first-quarter earnings beat, the projected decline in comparable restaurant sales and specific headwinds from its loyalty program necessitate investor caution and a focus on the company's strategies to mitigate these revenue challenges.