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Here's Why Investors Need to Watch Dolby (DLB) Stock
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Dolby Laboratories (DLB - Free Report) is well poised to benefit from increasing adoption of Dolby Atmos and Dolby Vision. Currently, Dolby carries a Zacks Rank #2 (Buy).
Apart from a favorable rank, DLB has a Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
The Zacks Consensus Estimate for fiscal 2023 and 2024 earnings per share is pegged at $3.44 and $3.89, indicating an increase of 9.6% and 13.1%, year over year, respectively. The long-term earnings growth rate is projected to be 16%.
The consensus estimate for fiscal 2023 and 2024 revenues is pegged at $1.28 billion and $1.35 billion, implying year-over-year growth of 2.3% and 5.5%, respectively.
DLB has an impressive earnings surprise record. Earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. Shares of DLB have increased 9.1% in the past year against a 3.8% decline of the Zacks sub-industry.
Image Source: Zacks Investment Research
A Look at Growth Drivers
San Francisco, CA-based Dolby specializes in audio noise reduction and audio encoding/compression technologies to revolutionize entertainment and communications at theaters, home, work and mobile devices.
Dolby’s performance is benefiting from the increasing adoption of Dolby Atmos, Dolby Vision and new imaging patents. The company is enjoying widespread industry adoption of Dolby Vision and Dolby Atmos including Apple and Xiaomi.
Vivo has launched its flagship phone with Dolby Vision capture and playback. Also, Dolby Atmos and Dolby Vision playback will be utilized in OnePlus 11 phone by Oppo.
The company expects revenues from these businesses to grow in the range of 15-25% in fiscal 2023, driven by continued momentum in broadcast, mobile and other markets. DLB is likely to benefit from Dolby.io, which enables developers to build immersive online experiences. The company’s extensive cost cutting efforts also bode well.
However, lower shipments in PC, broadcast, consumer electronics and gaming are weighing down on Dolby’s performance. As a result, the company expects its audio revenues to decline mid-single digits during fiscal 2023. Dolby Cinemas continues to suffer owing to weak box office proceeds.
For second-quarter fiscal 2023, the company expects earnings per share of 58-73 cents (GAAP basis) and 90 cents-$1.05 (non-GAAP basis), respectively. Revenues are projected in the range of $340-$370 million. Operating expenses are expected to be in the range of $227-$237 million (GAAP basis) and $193-$203 million (non-GAAP basis), respectively.
For fiscal 2023, the company expects revenues to grow in the range of low-single digits year over year. On a GAAP basis, operating margin is expected to be 19% and operating expenses are expected to decline by 2%. On a non-GAAP basis, operating margin is expected to be nearly 30% and operating expenses are anticipated to increase by 2%.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.85 per share, rising 10.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 28.1% in the past year.
The Zacks Consensus Estimate for Cadence’s 2023 earnings is pegged at $4.97 per share, rising 10% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.1%.
Cadence’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 10.5%. Shares of CDNS have increased 39.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings is pegged at $1.35 per share, rising 66.7% in the past 60 days.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of PEGA have declined 38% in the past year.
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Here's Why Investors Need to Watch Dolby (DLB) Stock
Dolby Laboratories (DLB - Free Report) is well poised to benefit from increasing adoption of Dolby Atmos and Dolby Vision. Currently, Dolby carries a Zacks Rank #2 (Buy).
Apart from a favorable rank, DLB has a Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
The Zacks Consensus Estimate for fiscal 2023 and 2024 earnings per share is pegged at $3.44 and $3.89, indicating an increase of 9.6% and 13.1%, year over year, respectively. The long-term earnings growth rate is projected to be 16%.
The consensus estimate for fiscal 2023 and 2024 revenues is pegged at $1.28 billion and $1.35 billion, implying year-over-year growth of 2.3% and 5.5%, respectively.
DLB has an impressive earnings surprise record. Earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. Shares of DLB have increased 9.1% in the past year against a 3.8% decline of the Zacks sub-industry.
Image Source: Zacks Investment Research
A Look at Growth Drivers
San Francisco, CA-based Dolby specializes in audio noise reduction and audio encoding/compression technologies to revolutionize entertainment and communications at theaters, home, work and mobile devices.
Dolby’s performance is benefiting from the increasing adoption of Dolby Atmos, Dolby Vision and new imaging patents. The company is enjoying widespread industry adoption of Dolby Vision and Dolby Atmos including Apple and Xiaomi.
Vivo has launched its flagship phone with Dolby Vision capture and playback. Also, Dolby Atmos and Dolby Vision playback will be utilized in OnePlus 11 phone by Oppo.
The company expects revenues from these businesses to grow in the range of 15-25% in fiscal 2023, driven by continued momentum in broadcast, mobile and other markets. DLB is likely to benefit from Dolby.io, which enables developers to build immersive online experiences. The company’s extensive cost cutting efforts also bode well.
However, lower shipments in PC, broadcast, consumer electronics and gaming are weighing down on Dolby’s performance. As a result, the company expects its audio revenues to decline mid-single digits during fiscal 2023. Dolby Cinemas continues to suffer owing to weak box office proceeds.
For second-quarter fiscal 2023, the company expects earnings per share of 58-73 cents (GAAP basis) and 90 cents-$1.05 (non-GAAP basis), respectively. Revenues are projected in the range of $340-$370 million. Operating expenses are expected to be in the range of $227-$237 million (GAAP basis) and $193-$203 million (non-GAAP basis), respectively.
For fiscal 2023, the company expects revenues to grow in the range of low-single digits year over year. On a GAAP basis, operating margin is expected to be 19% and operating expenses are expected to decline by 2%. On a non-GAAP basis, operating margin is expected to be nearly 30% and operating expenses are anticipated to increase by 2%.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Cadence Design Systems (CDNS - Free Report) and Pegasystems (PEGA - Free Report) , each presently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.85 per share, rising 10.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 28.1% in the past year.
The Zacks Consensus Estimate for Cadence’s 2023 earnings is pegged at $4.97 per share, rising 10% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.1%.
Cadence’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 10.5%. Shares of CDNS have increased 39.3% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings is pegged at $1.35 per share, rising 66.7% in the past 60 days.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of PEGA have declined 38% in the past year.