DLB  Dolby Laboratories

Exchange

NYSE

Sector

Technology

Industry

Radio And Television Broadcasting And Communications Equipment

Market Cap.

5.03B

Vuru Grade

65.41/100

Current Price

$49.04
+0.11 (+0.22%)

Growth Price

$26.20
Overvalued by 46.58%

Stability Price

$14.63
Overvalued by 70.17%

Company Metrics

  • P/E 24.29
  • P/S 4.78
  • P/B 2.5
  • EPS 2.02
  • Cash ROIC 18.03%
  • Cash Ratio 2.99
  • Dividend 0.56 / 1.14%
  • Avg. Vol. 443,865.00
  • Shares 102.57M
  • Market Cap. 5.03B

Company Description

Dolby Laboratories, Inc. develops and delivers products and technologies for the entertainment industry worldwide. It designs and manufactures video and audio products for film production, cinema, and television broadcast industries. The company involves in licensing technologies in signal processing systems that enhance sound quality or enable surround sound in movie soundtracks, DVDs, Blu-ray Di... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Dolby Laboratories and LG Electronics Announce First Smartphone to Support ...
Yahoo Finance - 15 minutes ago
Dolby Laboratories, Inc. (DLB) and LG Electronics (LG), today announced that the LG G6 smartphone will be the first mobile phone to support Dolby Vision high dynamic range (HDR) technology.
Why Dolby Laboratories, Inc. Stock Rose 14%
Motley Fool - Apr 28, 2016
So what: Dolby Laboratories, a company specializing in audio, imaging, and voice technologies, reported revenue and non-GAAP EPS of $274 million and $0.82, respectively.
Dolby Laboratories, Inc. Serves Up a Mix
Motley Fool - Oct 24, 2015
Similar to last quarter, however, Dolby's bottom line was well above expectations, albeit thanks mostly to a positive $0.16-per-share contribution from the sale of real estate during the quarter.
Dolby Laboratories, Inc.'s Quarter: Loud Earnings, Quiet Revenue
Motley Fool - Jul 23, 2015
Listen up, Dolby Laboratories (NYSE:DLB) investors, because your favorite audio specialist just reported fiscal third-quarter 2015 results.
Dolby Laboratories (DLB) Q4 2016 Results - Earnings Call Transcript
Seeking Alpha - Oct 27, 2016
Welcome to the Dolby Laboratories Conference Call discussing Fiscal Fourth Quarter Results. During the presentation, all participants will be in a listen-only mode.
Dolby Laboratories Among Fast Company's Most Innovative Companies in Consumer ...
Yahoo Finance - Feb 13, 2017
Dolby Laboratories, Inc. (DLB) has been featured in Fast Company's Most Innovative Companies in Consumer Electronics.
Dolby: An Overlooked Growth Story With Catalysts
Seeking Alpha - Jan 5, 2017
Dolby Laboratories (NYSE:DLB) is a compelling growth story. The stock is currently hovering around $46, but new growth drivers can send it above $60 this year.
LG's new SJ soundbar series brings Chromecast, high-resolution audio, and ... - Android Police
Dolby Laboratories Looks to Atmos to Help Drive Growth
Motley Fool - Dec 15, 2016
It's no mystery that Dolby Laboratories (NYSE:DLB) has struggled to reaccelerate growth in recent years, given the persistent declines of its legacy consumer-electronics licensing business.
Dolby Laboratories: An Impressive Q1, But Price And Dilution Remain Concerns
Seeking Alpha - Jan 26, 2017
DLB's Q1 came in well ahead of both guidance and consensus, though there was some help in terms of timing and recoveries. Guidance for the rest of the year still implies relatively slow growth, and Dolby remains heavily reliant on new, unproven ...
Dolby Laboratories Reports First Quarter Fiscal 2017 Financial Results - Business Wire (press release)
Dolby Laboratories beats Street 1Q forecasts - Yahoo Finance
Dolby Laboratories Chief Financial Officer Lewis Chew to Present at the Morgan ...
Yahoo Finance - Feb 16, 2017
Dolby Laboratories, Inc. (DLB) today announced that Lewis Chew, Executive Vice President and Chief Financial Officer, Dolby Laboratories, will present at the Morgan Stanley Technology, Media, and Telecom Conference in San Francisco, California, ...
The Q4 2017 EPS Estimates for Dolby Laboratories (DLB) Lifted by Dougherty & Co - DailyQuint
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for DLB to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate DLB's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$49.04 Current Price

$26.20 Growth Price (DCF)

Overvalued by 46.58%


Growth Rate Assumed by Market: 30.53%


Future Free Cash Flow Growth Rate: -5.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$14.63 Stability Price (EPV)

Overvalued by 70.17%


Discount Rate: 15.0%

$4.09 NCA Price

Overvalued by 91.65%

$65.00 Book Price

Undervalued by 32.54%


Excellent Cash Return on Invested Capital over the past 5 years

DLB has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

DLB has created $18.03 of cash for every $100 invested.
Figures in USD. Fiscal year ends in September
20122013201420152016
Free Cash Flow 222.10M 243.90M 244.88M 114.41M 135.06M
divided by
Invested Capital 1.01B 970.47M 994.96M 1.25B 1.46B
Cash ROIC 22.02% 25.13% 24.61% 9.13% 9.26%

Shrinking Return on Equity over the past 5 years

DLB has been shrinking returns with capital that shareholders have invested. This is a negative sign and demonstrates that both the business and management performance are weakening over time.

DLB has generated $12.01 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in September
20122013201420152016
Net Income 265.13M 190.30M 208.72M 183.24M 186.40M
divided by
Stockholders' Equity 1.72B 1.48B 1.71B 1.81B 1.97B
Return on Equity 15.41% 12.85% 12.21% 10.14% 9.46%

Excellent Business Performance over the past 10 years

DLB has been able to maintain profitability in good times and bad. This could mean DLB has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

DLB has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Free Cash Flow 147.17M 250.86M 259.23M 289.82M 356.33M 222.10M 243.90M 244.88M 114.41M 135.06M

Very Strong Balance Sheet

DLB has more Cash than its Total Liabilities, resulting in $2.90 Net Cash per share. In other words, if you buy DLB today, the price you're paying for shares is actually $46.14 because $2.90 of Cash is included in the current share price. This much Cash is very healthy. It can help DLB sustain itself in the face of any economic turmoil and makes a stock buyback more of a possibility.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Cash 599.68M 514.43M 735.49M 848.13M 942.79M 795.29M 594.66M 799.68M 670.83M 637.74M
Current Assets 733.42M 691.87M 900.84M 1.06B 1.16B 970.29M 812.72M 1.01B 918.33M 759.73M
Total Assets 991.70M 1.34B 1.58B 1.71B 1.88B 1.96B 1.74B 1.98B 2.13B 2.31B
Current Liabilities 143.20M 200.67M 156.58M 165.76M 159.39M 156.84M 172.82M 189.37M 209.68M 213.08M
Total Liabilities 194.54M 286.89M 240.21M 238.04M 220.87M 240.53M 256.84M 274.00M 326.23M 339.85M
Stockholder' Equity 797.16M 1.05B 1.34B 1.47B 1.66B 1.72B 1.48B 1.71B 1.81B 1.97B
Current Ratio 5.12 3.45 5.75 6.40 7.27 6.19 4.70 5.31 4.38 3.57
TL-to-TA 0.20 0.21 0.15 0.14 0.12 0.12 0.15 0.14 0.15 0.15

Consistent Reinvestment of Profits over the past 10 years

DLB has consistently retained profits. This may put DLB in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, DLB can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Retained Earnings 409.75M 609.50M 852.48M 1.14B 1.45B 1.71B 1.45B 1.66B 1.80B 1.94B
Retained Earnings Growth - 48.75% 39.87% 33.25% 27.23% 18.29% -14.92% 14.17% 8.45% 7.63%

Competitive Advantage over the past 10 years

DLB likely has a competitive advantage which prevents other companies from entering or competing in their industry. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at future prospects to determine its sustainability.

$26.60 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Net Income 142.83M 199.46M 242.99M 283.45M 309.27M 265.13M 190.30M 208.72M 183.24M 186.40M
divided by
Revenue 482.03M 640.23M 719.50M 922.71M 955.51M 926.26M 909.67M 960.18M 970.64M 1.03B
Net Profit Margin 29.63% 31.15% 33.77% 30.72% 32.37% 28.62% 20.92% 21.74% 18.88% 18.17%

Strong Pricing Power over the past 10 years

DLB has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$89.08 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Gross Profit 407.76M 572.45M 654.74M 790.90M 844.33M 834.24M 812.96M 890.00M 875.82M 916.76M
divided by
Revenue 482.03M 640.23M 719.50M 922.71M 955.51M 926.26M 909.67M 960.18M 970.64M 1.03B
Gross Margin 84.59% 89.41% 91.00% 85.71% 88.37% 90.06% 89.37% 92.69% 90.23% 89.38%

Medium Capital Intensity over the past 10 years

DLB has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

41.29% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Capital Expenditure 15.80M 13.61M 13.99M 37.48M 47.36M 167.70M 30.76M 116.67M 194.97M 221.78M
divided by
Net Income 142.83M 199.46M 242.99M 283.45M 309.27M 265.13M 190.30M 208.72M 183.24M 186.40M
Capital Expenditure Ratio 11.06% 6.82% 5.76% 13.22% 15.31% 63.25% 16.16% 55.90% 106.40% 118.98%

No Dividend History over the past 10 years

DLB has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 113.57M 114.78M 115.37M 115.39M 112.55M 107.54M 102.79M 103.63M 103.86M 102.42M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 50.40 32.27 47.70 66.66 30.51 28.98 38.48 43.55 34.14 45.19
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

DLB has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in September
2007200820092010201120122013201420152016
Shares Outstanding 113.57M 114.78M 115.37M 115.39M 112.55M 107.54M 102.79M 103.63M 103.86M 102.42M
Stock Bought Back - -1.05% -0.51% -0.02% 2.52% 4.66% 4.62% -0.81% -0.22% 1.40%
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Discussion
Sort By:
8
Posted by alexrasmussen  (on March 29, 2012)
Until it's reflected in the free cash flow this is a great long trade. I'm out as of now but if it comes back to $33 I'm in again. Need to replace a revenue stream that's been amazing. Would lock in gains before earnings announcements.
6
Posted by twentio  (on March 19, 2012)
Dolby is heavily reliant on income from DVDs, but its got such huge margins and it’s a non-capital intensive business. I'm not in yet, but I'm happy at $30. If it get's there I'm in.
3
Posted by gsanta111  (on March 29, 2012)
I look at them a while back and loved their margins, of course but their business didn't appeal to me.

They're too concentrated in the Asias and Americas, of which piracy is rampant.Their product side is too heavy into Cinema, although product sales only account for 20% of sales. I do like their diversification when it comes to their licensing.

You have well pointed out the concern for DVDs, Blue-rays, etc. and their inevitable disappearance.

I do like their presence in the market and the brand awareness.

The red flags I've talked about are just some things I personally don't ignore, I don't care how cheap the stock is.

(Unless it becomes a net-net of course)
1
Posted by fid2d  (on June 4, 2014)
First post: getting familiar with VURU toolset, and DLB potential.
Impression of strengths and weaknesses-
little debt, insiders selling, patents issued abating and derivative, future direction and prospects?
1
Posted by totallyrad510  (on October 15, 2012)
Not sure how this ranks 100!? Its been killing me the last two weeks!
0
Posted by pbanik  (on October 16, 2012)
Morningstar rates the stock four stars:
http://quote.morningstar.com/stock/s.aspx?t=dlb

MSN Money gives them a 7 out 10.
http://investing.money.msn.com/investments/stock-price?Symbol=dlb&ocid=qbeb

Louis Navellier gives the stock a C grade:
http://navelliergrowth.investorplace.com/portfolio-grader/stock-report.html?t=DLB

Stoxline gives the stock a sell rating:
http://www.stoxline.com/quote.php?symbol=dlb

DLB has no debt, and they hold $9.48/share in cash, and they don't pay out a dividend.
http://finance.yahoo.com/q/ks?s=DLB+Key+Statistics
Their net income is lower than it was a year ago in the second quarter.
http://www.google.ca/finance?q=NYSE%3ADLB&fstype=ii&ei=fLN8UKjdIoSVqgGv4QE
1
Posted by jeff.shaw32  (on March 18, 2012)
Their tech won’t be included in Windows 8. Revenue will drop by $80-90 MILLION. Steer clear...
1
Posted by steven  (on March 19, 2012)
It will only affect them as of 2013 and they are in the process of resolving this issue with other revenue sources. Still, they’re probably only fairly valued at this stage. Growth won’t be like it was in the past.
0
Posted by mpscaccia  (on May 4, 2012)
DLB up 17% today on news that it will be providing the audio in Windows 8. Would've been a nice addition. In spite of the good looking numbers, I too questioned their long term growth prospects given where their bread has been buttered over the years. Good for anybody who jumped in before the bump.