Dolby Laboratories (DLB) AI Stock Analysis

• Market Cap: $6.99B
• Dividend Yield: 1.74%
• Average Volume (3M): 514.56K
• Price to Earnings (P/E): 26.7
• Beta (1Y): 0.81
• Revenue Growth: 2.71%
• EPS Growth: 39.56%
• Country: US
• Employees: 2,080
• Sector: Industrials
• Sector Strength: 63
• Industry: Information Technology Services
• EPS (TTM): 2.71
• Shares Outstanding: 61,206,300
• 10 Day Avg. Volume: 381,056
• 30 Day Avg. Volume: 514,562
• PEG Ratio: 0.68
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.92
• Price to Cash Flow (P/CF): 18.20
• P/FCF Ratio: 18.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $100.00
• Price Target Upside: 42.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Dolby Laboratories has a solid financial foundation with strong profitability and cash flow management. The technical analysis suggests upward momentum, though caution is needed due to potential overbought conditions. Valuation metrics point to a high P/E ratio, indicating a potential overvaluation. The earnings call reinforced growth in key areas, despite some challenges. Overall, the company is well-positioned for continued success, but investors should monitor valuation and market conditions.

Positive Factors

Earnings

Overall revenue improved to $357 million and was above the estimate of $347.5 million.

Investment Rating

Reaffirming the OUTPERFORM investment rating and setting a $100 price target reflects confidence in Dolby's growth strategy and technology deployment.

Strategic Partnerships

The agreement with Samsung to include Dolby technology on in-car displays adds to the capabilities the company can provide to auto OEMs.

Negative Factors

Market Challenges

Stalling unit shipments for key device categories present a significant challenge that has persisted.

Dolby Laboratories Business Overview & Revenue Model

Company Description

Dolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment and communications at the cinema, DTV, transmissions and devices, mobile devices, OTT video and music services, and home entertainment devices. The company develops and licenses its audio technologies, such as AAC & HE-AAC, a digital audio codec solution used for a range of media applications.; AVC, a digital video codec with high bandwidth efficiency used in various media devices; Dolby AC-4, an digital audio coding technology that delivers new audio experiences to a range of playback devices; and Dolby Atmos technology for cinema and a range of media devices. Its audio technologies also include Dolby Digital, a digital audio coding technology that provides multichannel sound to applications; Dolby Digital Plus, a digital audio coding technology that offers audio transmission for a range of media applications and devices; Dolby TrueHD, a digital audio coding technology providing encoding for media application; Dolby Vision, an imaging technology for cinema and media devices; Dolby Voice, an audio conferencing technology; and HEVC, a digital video codec with high bandwidth efficiency to support for media devices. In addition, the company designs and manufactures digital cinema servers, cinema processors, amplifiers, loudspeakers, hardware components, video conferencing solutions, and other products for the cinema, television, broadcast, communication, and entertainment industries. Further, it offers various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment. The company serves film studios, content creators, post-production facilities, cinema operators, broadcasters, and video game designers. It sells its products directly to the end users, as well as through dealers and distributors worldwide. Dolby Laboratories, Inc. was founded in 1965 and is headquartered in San Francisco, California.

How the Company Makes Money

Dolby Laboratories makes money primarily through licensing its audio and imaging technologies to a wide range of partners, including consumer electronics manufacturers, content creators, and broadcasters. The company generates significant revenue by licensing its technologies, such as Dolby Atmos and Dolby Vision, to enhance the audio and visual capabilities of products like televisions, smartphones, and gaming consoles. Additionally, Dolby earns revenue from its cinema products and services, including Dolby Cinema, which offers a premium movie-watching experience. The company also benefits from strategic partnerships with major entertainment companies, enabling it to extend its reach and influence across the film and entertainment industries.

Dolby Laboratories Financial Statement Overview

Summary

Dolby Laboratories exhibits a strong financial position with robust profitability, minimal leverage, and efficient cash flow management. The income statement reflects strong margins and stable revenue growth, while the balance sheet showcases a solid capital structure with low financial risk. Cash flow metrics indicate healthy liquidity. There is potential for improvement in revenue growth and ROE.

Income Statement

Dolby Laboratories shows a strong income statement with a healthy gross profit margin of 88.96% and net profit margin of 20.55% in the TTM (Trailing-Twelve-Months), indicating efficient cost management and profitability. Revenue growth is modest at 1.59% from the previous year, suggesting stable business operations. The EBIT and EBITDA margins are solid at 20.18% and 26.88%, respectively, reflecting strong operational performance. However, the pace of revenue growth could be improved for a higher score.

Balance Sheet

The balance sheet of Dolby Laboratories is robust, with a low debt-to-equity ratio of 0.02, indicating minimal leverage and financial risk. The equity ratio is high at 79.67%, showcasing a strong capital structure. Return on Equity (ROE) is a decent 10.57%, driven by steady profitability. The company maintains substantial equity, offering financial stability and flexibility. Improvement in ROE through higher profit margins could enhance the overall score.

Cash Flow

Dolby Laboratories demonstrates strong cash flow management, with a free cash flow growth rate of 14.71% and healthy operating cash flow to net income ratio of 1.25 in the TTM. The free cash flow to net income ratio of 1.14 further underscores efficient cash generation relative to net earnings. The company effectively converts its profits into cash, supporting liquidity and operational flexibility. Continued focus on cash flow improvement will be beneficial.

Breakdown
Sep 2024	Sep 2022	Sep 2021	Sep 2020	Sep 2019
Income Statement		Total Revenue
1.27B	1.25B	1.28B	1.16B	1.24B
	Gross Profit
1.13B	1.11B	1.15B	1.02B	1.08B
	EBIT
258.33M	206.60M	344.39M	218.74M	257.08M
	EBITDA
258.33M	329.90M	464.12M	332.60M	404.16M
	Net Income Common Stockholders
360.64M	184.09M	310.23M	231.36M	255.15M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
482.05M	809.34M	1.26B	1.12B	916.36M
	Total Assets
3.11B	2.69B	3.11B	2.92B	2.82B
	Total Debt
46.99M	50.94M	72.12M	81.14M	0.00
	Net Debt
-435.06M	-569.18M	-1.15B	-990.74M	-797.21M
	Total Liabilities
623.03M	438.53M	501.45M	478.92M	508.72M
	Stockholders Equity
2.48B	2.25B	2.60B	2.43B	2.31B
Cash Flow		Free Cash Flow
297.25M	259.12M	393.30M	274.86M	214.14M
	Operating Cash Flow
327.25M	318.58M	447.75M	343.85M	327.67M
	Investing Cash Flow
-286.29M	-295.94M	-44.91M	134.37M	-56.23M
	Financing Cash Flow
-287.81M	-610.56M	-252.51M	-207.78M	-385.28M

Dolby Laboratories Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 70.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLB, the sentiment is Negative. The current price of 70.06 is below the 20-day moving average (MA) of 80.17, below the 50-day MA of 81.68, and below the 200-day MA of 76.87, indicating a bearish trend. The MACD of -0.32 indicates Positive momentum. The RSI at 45.05 is Neutral, neither overbought nor oversold. The STOCH value of 32.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLB.

Dolby Laboratories Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CACI	80 Outperform	$8.66B	18.16	13.79%	―	14.04%	29.08%
G	80 Outperform	$8.27B	16.53	22.15%	1.33%	6.46%	-16.94%
JKHY	76 Outperform	$12.58B	31.13	21.90%	1.29%	5.36%	8.62%
DLB	72 Outperform	$6.99B	26.74	10.82%	1.74%	2.71%	39.56%
EPAM	69 Neutral	$8.23B	18.48	12.80%	―	0.80%	10.05%
Sector *	62 Neutral	$7.24B	12.39	3.08%	3.39%	3.63%	-14.35%
DXC	47 Neutral	$2.69B	267.98	-2.46%	―	-5.65%	78.20%

Dolby Laboratories Corporate Events

Dolby Laboratories Unveils 2025 Executive Bonus Plan

Dolby Laboratories has introduced the 2025 Executive Bonus Plan, offering cash bonuses to selected executives based on a percentage of their base salary and the achievement of specific financial goals. The CEO’s bonus is set at 100% of his base salary, while other eligible officers have a target of 65%. The actual payout can vary, influenced by the company’s performance and other discretionary factors, with funding capped at 150% of the target. This plan aligns with the Dolby 2020 Stock Plan, ensuring bonuses do not exceed established limits.