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Dolby Laboratories (DLB) Up 9.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Dolby Laboratories due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Dolby Q1 Earnings Surpass Estimates, Revenues Up Y/Y
Dolby reported impressive first-quarter fiscal 2021 (ended Dec 25, 2020) results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Despite the COVID-19 adversities, higher adoption of Dolby premium technologies with strength across Licensing segment drove Dolby’s quarterly performance.
Net Income
On a GAAP basis, net income was $135.2 million or $1.30 per share compared with $48.8 million or 47 cents per share in the year-ago quarter. The year-over-year increase was primarily driven by higher revenues and lower operating expenses. The figure also surpassed the company’s guidance.
Non-GAAP net income came in at $153.3 million or $1.48 per share compared with $65.5 million or 64 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 44 cents.
Revenues
Total revenues amounted $389.9 million, up 33.6% from $291.9 million in the year-ago quarter. The impressive growth was primarily driven by higher licensing revenues coupled with strong adoption of Dolby’s premium technologies. Further, the top line surpassed the Zacks Consensus Estimate of $344 million.
Segmental Performance
Revenues from Licensing were $373 million, up 44.8% year over year, driven by higher revenues in Broadcast business. With higher adoption of Dolby Vision and Dolby Atmos, Broadcast business witnessed nearly 36% year-over-year surge in revenues, bolstered by higher recoveries and shipments despite the COVID-19 adversities.
Sales from Consumer Electronics grew nearly 6% due to higher adoption of patent programs. Revenues from Mobile Devices were up more than 200% from prior-year quarter, driven by higher customer adoption and favorable timing of revenue under customer contracts. Sales from PC were up about 3% year over year due to strong adoption of Dolby Atmos and Dolby Vision. Revenues from Other Markets increased nearly 8%, driven by higher gaming revenues. However, it was partially offset by a lower Dolby Cinema box office share due to COVID-19 woes.
Products and Services revenues came in at $16.9 million, down 50.7% year over year. The downside was primarily caused by the impact of COVID-19 pandemic on the Cinema business as social distancing norms led to movie theatre closures.
Other Details
Gross profit in the fiscal first quarter was $354.6 million compared with $254.6 million in the year-earlier quarter. Total operating expenses fell 7.8% to $189.8 million, primarily due to gain on sale of assets during the quarter. Operating income was $164.7 million compared with $48.6 million in the year-ago quarter.
Cash Flow and Liquidity
During the first three months of fiscal 2021, Dolby generated $82.2 million of net cash from operating activities compared with $31.2 million a year ago. As of Dec 25, 2020, the company had $1,110 million in cash and cash equivalents with $121.2 million of other non-current liabilities.
Q2 Guidance
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for second-quarter fiscal 2021. The company expects GAAP earnings in the range of 36-51 cents per share and non-GAAP earnings in the range of 57-72 cents per share on revenues of $280-$310 million. Unit volume shipments across various end markets and devices are likely to be lower due to the COVID-19 woes. On a GAAP basis, operating expenses are expected in the $200-$210 million band, whereas on a non-GAAP basis, operating expenses are anticipated in the range of $175-$185 million.
Due to certain macroeconomic factors like unemployment and supply chain disruptions, Dolby’s near-term performance is more prone to getting affected by the pandemic across various end markets. Although its products and services revenues are likely to be affected by the downturn of the cinema industry owing to the global pandemic, Dolby is committed to supporting its business operations in this hour of crisis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.82% due to these changes.
VGM Scores
Currently, Dolby Laboratories has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dolby Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Dolby Laboratories (DLB) Up 9.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Dolby Laboratories due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Dolby Q1 Earnings Surpass Estimates, Revenues Up Y/Y
Dolby reported impressive first-quarter fiscal 2021 (ended Dec 25, 2020) results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Despite the COVID-19 adversities, higher adoption of Dolby premium technologies with strength across Licensing segment drove Dolby’s quarterly performance.
Net Income
On a GAAP basis, net income was $135.2 million or $1.30 per share compared with $48.8 million or 47 cents per share in the year-ago quarter. The year-over-year increase was primarily driven by higher revenues and lower operating expenses. The figure also surpassed the company’s guidance.
Non-GAAP net income came in at $153.3 million or $1.48 per share compared with $65.5 million or 64 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 44 cents.
Revenues
Total revenues amounted $389.9 million, up 33.6% from $291.9 million in the year-ago quarter. The impressive growth was primarily driven by higher licensing revenues coupled with strong adoption of Dolby’s premium technologies. Further, the top line surpassed the Zacks Consensus Estimate of $344 million.
Segmental Performance
Revenues from Licensing were $373 million, up 44.8% year over year, driven by higher revenues in Broadcast business. With higher adoption of Dolby Vision and Dolby Atmos, Broadcast business witnessed nearly 36% year-over-year surge in revenues, bolstered by higher recoveries and shipments despite the COVID-19 adversities.
Sales from Consumer Electronics grew nearly 6% due to higher adoption of patent programs. Revenues from Mobile Devices were up more than 200% from prior-year quarter, driven by higher customer adoption and favorable timing of revenue under customer contracts. Sales from PC were up about 3% year over year due to strong adoption of Dolby Atmos and Dolby Vision. Revenues from Other Markets increased nearly 8%, driven by higher gaming revenues. However, it was partially offset by a lower Dolby Cinema box office share due to COVID-19 woes.
Products and Services revenues came in at $16.9 million, down 50.7% year over year. The downside was primarily caused by the impact of COVID-19 pandemic on the Cinema business as social distancing norms led to movie theatre closures.
Other Details
Gross profit in the fiscal first quarter was $354.6 million compared with $254.6 million in the year-earlier quarter. Total operating expenses fell 7.8% to $189.8 million, primarily due to gain on sale of assets during the quarter. Operating income was $164.7 million compared with $48.6 million in the year-ago quarter.
Cash Flow and Liquidity
During the first three months of fiscal 2021, Dolby generated $82.2 million of net cash from operating activities compared with $31.2 million a year ago. As of Dec 25, 2020, the company had $1,110 million in cash and cash equivalents with $121.2 million of other non-current liabilities.
Q2 Guidance
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for second-quarter fiscal 2021. The company expects GAAP earnings in the range of 36-51 cents per share and non-GAAP earnings in the range of 57-72 cents per share on revenues of $280-$310 million. Unit volume shipments across various end markets and devices are likely to be lower due to the COVID-19 woes. On a GAAP basis, operating expenses are expected in the $200-$210 million band, whereas on a non-GAAP basis, operating expenses are anticipated in the range of $175-$185 million.
Due to certain macroeconomic factors like unemployment and supply chain disruptions, Dolby’s near-term performance is more prone to getting affected by the pandemic across various end markets. Although its products and services revenues are likely to be affected by the downturn of the cinema industry owing to the global pandemic, Dolby is committed to supporting its business operations in this hour of crisis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.82% due to these changes.
VGM Scores
Currently, Dolby Laboratories has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dolby Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.