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Dolby Laboratories (DLB) Down 1.3% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dolby Laboratories due for a breakout? 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 drivers.
Dolby Q2 Earnings Top Estimates, Revenues Fall Y/Y
Dolby reported lackluster second-quarter fiscal 2021 (ended Mar 26, 2021) results, with net earnings and sales declining on a year-over-year basis. However, both the bottom and top lines surpassed their respective Zacks Consensus Estimate. Lower revenues from cinema-related business, along with supply chain disruptions due to COVID restrictions, marred its performance.
Net Income
On a GAAP basis, net income was $76.2 million or 73 cents per share compared with $88.5 million or 86 cents per share in the year-ago quarter. The year-over-year decrease was primarily due to top-line contraction.
Non-GAAP net income came in at $94.8 million or 91 cents per share compared with $106.6 million or $1.04 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 24 cents.
Revenues
Total revenues amounted $319.6 million, down 9.2% from $351.8 million in the year-ago quarter. The fall was due to weak revenues from cinema-related business accompanied by lower recoveries. However, it was partly offset by higher market volume and strong adoption of Dolby’s premium technologies. Nevertheless, the top line surpassed the Zacks Consensus Estimate of $297 million.
Segmental Performance
Revenues from Licensing were $303.6 million, down 7.7% year over year, due to lower revenues in Broadcast business. Broadcast revenues fell nearly 19% as a result of lower recoveries.
On a year-over-year basis, sales from Consumer Electronics decreased nearly 2% due to unfavorable timing of certain contracts. However, this was partly offset by higher sales of sound bars. Revenues from Mobile Devices were down 12% from the prior-year quarter. Meanwhile, sales from PC were up about 12% due to strong adoption of Dolby Atmos and Dolby Vision coupled with robust market volume. Revenues from Other Markets increased nearly 14%, driven by higher gaming and automotive revenues. However, it was partly offset by a lower Dolby Cinema box office share due to COVID-19 woes.
Products and Services revenues came in at $16 million, down 30.4% 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 second quarter was $287.2 million compared with $315 million in the year-earlier quarter. Total operating expenses fell 2.4% to $204 million, primarily due to restructuring credits in the year-ago quarter. Operating income was $83.2 million compared with $105.9 million in the year-ago quarter.
Cash Flow and Liquidity
During the first six months of fiscal 2021, Dolby generated $165.6 million of net cash from operating activities compared with $96.9 million a year ago. As of Mar 26, 2021, the company had $1,104.6 million in cash and cash equivalents with $118.6 million of other non-current liabilities.
Q3 Guidance
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for third-quarter fiscal 2021.
The company expects GAAP earnings in the range of 15-30 cents per share and non-GAAP earnings in the range of 37-52 cents per share on revenues of $260-$290 million. Unit volume shipments across various end markets and devices are likely to be hampered by the COVID-19 adversities. On a GAAP basis, operating expenses are expected in the $210-$220 million band, whereas on a non-GAAP basis, operating expenses are anticipated in the range of $185-$195 million.
Due to certain macroeconomic factors like unemployment and supply chain disruptions, Dolby’s near-term performance is more susceptible to getting affected by the pandemic across various end markets. Although its products and services revenues are likely to be hurt 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, estimates review have trended downward during the past month. The consensus estimate has shifted -23.93% due to these changes.
VGM Scores
At this time, Dolby Laboratories has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dolby Laboratories has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Dolby Laboratories (DLB) Down 1.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dolby Laboratories due for a breakout? 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 drivers.
Dolby Q2 Earnings Top Estimates, Revenues Fall Y/Y
Dolby reported lackluster second-quarter fiscal 2021 (ended Mar 26, 2021) results, with net earnings and sales declining on a year-over-year basis. However, both the bottom and top lines surpassed their respective Zacks Consensus Estimate. Lower revenues from cinema-related business, along with supply chain disruptions due to COVID restrictions, marred its performance.
Net Income
On a GAAP basis, net income was $76.2 million or 73 cents per share compared with $88.5 million or 86 cents per share in the year-ago quarter. The year-over-year decrease was primarily due to top-line contraction.
Non-GAAP net income came in at $94.8 million or 91 cents per share compared with $106.6 million or $1.04 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 24 cents.
Revenues
Total revenues amounted $319.6 million, down 9.2% from $351.8 million in the year-ago quarter. The fall was due to weak revenues from cinema-related business accompanied by lower recoveries. However, it was partly offset by higher market volume and strong adoption of Dolby’s premium technologies. Nevertheless, the top line surpassed the Zacks Consensus Estimate of $297 million.
Segmental Performance
Revenues from Licensing were $303.6 million, down 7.7% year over year, due to lower revenues in Broadcast business. Broadcast revenues fell nearly 19% as a result of lower recoveries.
On a year-over-year basis, sales from Consumer Electronics decreased nearly 2% due to unfavorable timing of certain contracts. However, this was partly offset by higher sales of sound bars. Revenues from Mobile Devices were down 12% from the prior-year quarter. Meanwhile, sales from PC were up about 12% due to strong adoption of Dolby Atmos and Dolby Vision coupled with robust market volume. Revenues from Other Markets increased nearly 14%, driven by higher gaming and automotive revenues. However, it was partly offset by a lower Dolby Cinema box office share due to COVID-19 woes.
Products and Services revenues came in at $16 million, down 30.4% 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 second quarter was $287.2 million compared with $315 million in the year-earlier quarter. Total operating expenses fell 2.4% to $204 million, primarily due to restructuring credits in the year-ago quarter. Operating income was $83.2 million compared with $105.9 million in the year-ago quarter.
Cash Flow and Liquidity
During the first six months of fiscal 2021, Dolby generated $165.6 million of net cash from operating activities compared with $96.9 million a year ago. As of Mar 26, 2021, the company had $1,104.6 million in cash and cash equivalents with $118.6 million of other non-current liabilities.
Q3 Guidance
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for third-quarter fiscal 2021.
The company expects GAAP earnings in the range of 15-30 cents per share and non-GAAP earnings in the range of 37-52 cents per share on revenues of $260-$290 million. Unit volume shipments across various end markets and devices are likely to be hampered by the COVID-19 adversities. On a GAAP basis, operating expenses are expected in the $210-$220 million band, whereas on a non-GAAP basis, operating expenses are anticipated in the range of $185-$195 million.
Due to certain macroeconomic factors like unemployment and supply chain disruptions, Dolby’s near-term performance is more susceptible to getting affected by the pandemic across various end markets. Although its products and services revenues are likely to be hurt 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, estimates review have trended downward during the past month. The consensus estimate has shifted -23.93% due to these changes.
VGM Scores
At this time, Dolby Laboratories has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dolby Laboratories has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.