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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on DLB

Dolby Laboratories' recent performance was negatively impacted by a downgrade from Barrington Research, which lowered its price target from $95 to $90. Additionally, Dynamic Technology Lab Private Ltd reduced its position in the company by 79.5%. The company's Q1 earnings revealed a year-over-year decline in sales, primarily due to weaker licensing. Furthermore, several institutional investors, including Envestnet Asset Management Inc. and Bank of New York Mellon Corp, have sold shares of the company, contributing to downward pressure.

1.c. Company Highlights

2. Dolby Laboratories' Q1 FY '26 Earnings: A Strong Start to the Year

Dolby Laboratories reported revenue of $347 million for the first quarter of fiscal year 2026, exceeding the high end of guidance primarily due to the timing of deals coming in earlier than expected and a $7 million favorable true-up for Q4 shipments. Non-GAAP earnings per share was $1.06, also above the high end of guidance, driven by higher revenue and lower operating expenses. The actual EPS came out higher than analysts' estimates of $0.993. The strong financial performance was highlighted by Kevin Yeaman, "FY '26 is off to a good start. Revenue and non-GAAP earnings came in above the high end of the range of guidance."

Publication Date: Feb -14

📋 Highlights
  • Revenue Exceeds Guidance:: Q1 revenue reached $347 million, surpassing the high end of guidance, driven by early deal closures and a $7 million favorable true-up from Q4 shipments.
  • Non-GAAP Earnings Beat High End:: Non-GAAP EPS was $1.06, exceeding guidance due to higher revenue and reduced operating expenses.
  • Full-Year Guidance Raised:: Fiscal 2026 revenue guidance increased to $1.4 billion–$1.45 billion, with licensing revenue projected at $1.295 billion–$1.345 billion.
  • Growth in Mobile and Automotive:: Strong momentum in mobile (new deals/renewals) and automotive in-car entertainment, with Dolby Vision 2 showcased at CES.
  • Strategic Partnerships Expand:: Peacock became the first streaming service to integrate Dolby’s full premium suite, while Meta enabled Dolby Vision on Facebook, expanding mobile adoption.

Segment Performance

The company's momentum in automotive, new growth drivers for Dolby Vision and TVs, and growing adoption of Dolby Vision and social media were key highlights. Robert Park mentioned that they expect full year fiscal '26 guidance to be raised to $1.4 billion to $1.45 billion, with licensing revenue between $1.295 billion and $1.345 billion. The growth in Mobile was driven by the signing of new deals or renewals, although the timing of deals can fluctuate quarter-to-quarter.

Guidance and Outlook

The company raised its guidance for the year, with Kevin Yeaman stating that there weren't material adjustments due to macro issues like tariffs or memory pricing. The guidance was raised given the true-up and strengths in the pipeline. Analysts estimate next year's revenue growth at 3.8%, indicating a steady growth trajectory.

Valuation

With a P/E Ratio of 22.78 and an EV/EBITDA of 15.1, the market is pricing in a certain level of growth. The ROE of 10.65% and ROIC of 8.76% indicate a decent return on equity and invested capital. The Dividend Yield is 2.09%, providing a relatively stable income stream. The Free Cash Flow Yield is 6.0%, suggesting a reasonable valuation.

Recent Developments

The company has made significant announcements, including Peacock becoming the first streaming service to integrate their full suite of premium picture and sound innovations. Meta now supports Dolby Vision on Facebook, creating a great opportunity for the company. The CES event was also a success, with hundreds of groups coming through to experience their latest innovations, particularly in automotive in-car entertainment.

3. NewsRoom

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CervoMed Announces New Data at the AD/PD™ 2026 Scientific Conference that Reinforce Neflamapimod's Positive Effects in Dementia with Lewy Bodies (DLB) in Patients without Alzheimer's Disease Co-Pathology

Mar -19

Source: globenewswire.com

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3 Audio Video Stocks to Buy as Industry Tailwinds Gain Momentum

Mar -18

Source: zacks.com

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4 Consumer Discretionary Stocks to Grab as Inflation Continues to Ease

Mar -18

Source: zacks.com

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Dynamic Technology Lab Private Ltd Has $274,000 Stock Holdings in Dolby Laboratories $DLB

Mar -13

Source: defenseworld.net

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Cognition Therapeutics Advancing Zervimesine (CT1812) for Dementia with Lewy Bodies (DLB) Psychosis

Mar -02

Source: globenewswire.com

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5 Solid Discretionary Stocks to Grab as Consumer Confidence Rebounds

Feb -25

Source: zacks.com

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Dolby Laboratories $DLB Shares Sold by Envestnet Asset Management Inc.

Feb -19

Source: defenseworld.net

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Wall Street Analysts Predict a 40.22% Upside in Dolby Laboratories (DLB): Here's What You Should Know

Feb -18

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.58%)

6. Segments

Licensing

Expected Growth: 4.5%

Dolby Laboratories' 4.5% licensing growth driven by increasing demand for premium audio experiences in smartphones, TVs, and PCs. Rising adoption of Dolby Atmos and Vision technologies in streaming services and cinemas also contributes to growth. Additionally, expansion into new markets, such as gaming and virtual reality, further fuels licensing revenue.

Products and Services

Expected Growth: 5.5%

Dolby Laboratories' 5.5% growth in Products and Services is driven by increasing demand for premium audio experiences, expansion into new markets such as gaming and virtual reality, and growing adoption of Dolby Atmos and Vision technologies in cinemas, homes, and mobile devices.

7. Detailed Products

Dolby Atmos

An audio technology that allows for the creation and playback of immersive, three-dimensional soundscapes.

Dolby Vision

A video technology that offers high-dynamic-range (HDR) and wide-color-gamut (WCG) capabilities.

Dolby Voice

A conferencing technology that provides high-quality, crystal-clear audio for online meetings and collaborations.

Dolby Cinema

A premium cinema experience that combines Dolby Vision and Dolby Atmos technologies.

Dolby On

A mobile app that allows users to record and share high-quality audio and video content.

Dolby.io

A cloud-based platform that provides APIs and software development kits (SDKs) for developers to integrate Dolby technologies into their applications.

8. Dolby Laboratories, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dolby Laboratories, Inc. has a moderate threat of substitutes due to the presence of alternative audio technologies such as DTS and SRS. However, Dolby's strong brand recognition and partnerships with major studios and manufacturers mitigate this threat.

Bargaining Power Of Customers

Dolby's customers, including movie studios and electronics manufacturers, have limited bargaining power due to the company's dominant market position and patented technologies.

Bargaining Power Of Suppliers

Dolby's suppliers, including semiconductor manufacturers and component suppliers, have limited bargaining power due to the company's strong relationships and diversified supply chain.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the audio technology industry, including significant R&D investments and patent protections.

Intensity Of Rivalry

The intensity of rivalry in the audio technology industry is moderate, with Dolby facing competition from established players such as DTS and SRS, but maintaining a strong market position through innovation and partnerships.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 2.11%
Debt Cost 3.95%
Equity Weight 97.89%
Equity Cost 8.84%
WACC 8.74%
Leverage 2.15%

11. Quality Control: Dolby Laboratories, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Leidos

A-Score: 6.0/10

Value: 4.6

Growth: 6.6

Quality: 5.9

Yield: 2.0

Momentum: 8.0

Volatility: 9.0

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Jack Henry

A-Score: 5.5/10

Value: 2.5

Growth: 5.7

Quality: 8.4

Yield: 2.0

Momentum: 5.0

Volatility: 9.7

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Dolby Laboratories

A-Score: 5.1/10

Value: 3.5

Growth: 3.3

Quality: 8.5

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

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ExlService

A-Score: 4.9/10

Value: 2.5

Growth: 7.9

Quality: 6.9

Yield: 0.0

Momentum: 4.0

Volatility: 8.3

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Concentrix

A-Score: 4.7/10

Value: 9.2

Growth: 6.0

Quality: 4.2

Yield: 4.0

Momentum: 1.5

Volatility: 3.3

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ASGN

A-Score: 4.1/10

Value: 7.7

Growth: 6.2

Quality: 5.2

Yield: 0.0

Momentum: 0.0

Volatility: 5.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

59.66$

Current Price

59.66$

Potential

-0.00%

Expected Cash-Flows