What Our Analysts Know About Dolby Laboratories

Dolby Laboratories logged a 0.4% change during today's morning session, and is now trading at a price of $85.18 per share.

Dolby Laboratories returned gains of 12.0% last year, with its stock price reaching a high of $91.02 and a low of $61.55. Over the same period, the stock outperformed the S&P 500 index by 5.0%. More recently, the company's 50-day average price was $84.37. 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. Based in San Francisco, CA, the mid-cap Industrials company has 2,336 full time employees. Dolby Laboratories has offered a 1.3% dividend yield over the last 12 months.

An Exceptionally Strong Balance Sheet:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $1,242 $1,162 $1,281 $1,254
Operating Margins 23.6% 19.0% 26.6% 17.3%
Net Margins 20.55% 19.91% 24.21% 14.68%
Net Income (MM) $255 $231 $310 $184
Net Interest Expense (MM) $25 $13 $3 $6
Depreciation & Amort. (MM) -$85 -$91 -$113 -$104
Earnings Per Share $2.44 $2.25 $2.97 $2.48
EPS Growth n/a -7.79% 32.0% -16.5%
Diluted Shares (MM) 105 103 105 59
Free Cash Flow (MM) $214 $275 $393 $259
Capital Expenditures (MM) -$114 -$69 -$54 -$59
Net Current Assets (MM) $873 $1,068 $1,259 $872
Current Ratio 4.5 5.79 5.58 4.72
Net Debt / EBITDA n/a -2.89 -2.49 -1.75

Dolby Laboratories has strong margins with a negative growth trend and an excellent current ratio. Additionally, the company's financial statements display low leverage and consistent free cash flow. However, the firm has EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Dolby Laboratories has stable revenues and decreasing reinvestment in the business.

Dolby Laboratories's Valuation Is in Line With Its Sector Averages:

Dolby Laboratories has a trailing twelve month P/E ratio of 34.0, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $3.77, the company has a forward P/E ratio of 22.4. The 9.1% compound average growth rate of Dolby Laboratories's historical and projected earnings per share yields a PEG ratio of 3.74. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Dolby Laboratories in terms of its equity because its P/B ratio is 3.45 while the sector average is 3.78. The company's shares are currently trading 126.7% above their Graham number. In conclusion, Dolby Laboratories's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

Dolby Laboratories Is the Subject of Mixed Market Indicators:

The lone analyst who follows Dolby Laboratories has a rating of buy and a target price of $98.0, which is -13.9 away from its current price.

Dolby Laboratories has a very low short interest because 1.4% of the company's shares are sold short. Institutions own 94.6% of the company's shares, and the insider ownership rate stands at 1.71%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $526,733,104.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.