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3 Audio Video Stocks to Focus on From a Flourishing Industry
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The Zacks Audio Video Production industry participants like Dolby Laboratories, Inc. (DLB - Free Report) , Sonos, Inc. (SONO - Free Report) and GoPro, Inc. (GPRO - Free Report) are likely to benefit from investments in cutting-edge technology solutions that create better communication experiences. The players also stand to gain as they increase focus on direct-to-customer sales channels. Rapid technological advances, such as 4K, 8K and immersive audio formats, are boosting demand for new devices, which bodes well for participants like GoPro and Dolby.
However, global macroeconomic uncertainty amid escalating trade tensions, tariffs and associated inflationary pressure is likely to keep consumer spending in check. This does not bode well for the participants. A highly promotional environment and stiff competition from importers of comparatively low-priced devices are denting margins. Online accessibility of recording equipment and the availability of distribution channels on the Internet are additional headwinds.
Industry Description
The Zacks Audio Video Production industry comprises television, speaker, video player and camcorder manufacturers. It includes companies that offer gaming consoles, drones and high-end cameras for individuals and industrial markets. These firms provide state-of-the-art audio, imaging and voice technologies that enhance entertainment and communication experiences. Some industry participants develop audio and imaging products, including digital cinema servers and products for film production and entertainment industries. Apart from providing theatrical and television production services for cinema exhibitions, broadcast and home entertainment, these companies work with film studios, content creators, broadcasters and video game designers. Some prominent players are present in the music and image-based software markets worldwide.
4 Trends Shaping the Future of the Audio-Video Production Industry
Technological Advancement to Spur Growth: From rapid technological advances like 4K, 8K and immersive audio formats, the demand for high-resolution visual and audio experiences is a major growth driver. The rise of streaming or OTT platforms is fueling this trend, as consumers and businesses seek to recreate a cinematic atmosphere at home.
Increasing Demand for Premium Entertainment: The industry performed well despite drastic changes in how media is consumed and distributed. The rise in demand for premium entertainment from record labels, TV producers and advertisers is likely to stoke profitable growth. Strong demand across all regions with a more direct-to-consumer, subscription-centric model bodes well for industry participants.
Macroeconomic Headwinds Likely to Hurt Consumer Demand: The global macroeconomic uncertainty, amid escalating trade tensions and tariffs, and associated inflationary pressures, are likely to keep consumer spending, especially discretionary purchases, in check. While companies keep investing in market share gains and supply chain resilience, a shortage of critical hardware components due to disruption in the supply chain could hurt revenues in the near term. Fluctuations in commodity pricing for different components are additional concerns. Elevated promotional activity to boost sales amid weak spending is also affecting the performance of these industry participants.
Aggressive Competition: In the United States, smart-connected televisions, microphones and speaker enclosures are the most popular electronic devices among customers. However, U.S.-based manufacturers of audio and video systems face intense competition from importers of comparatively low-priced devices, particularly from China, Vietnam and Mexico. These firms face stiff competition across all end markets, often leading to intense price wars and margin contraction.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Audio Video Production industry is housed within the broader Zacks Consumer Discretionary sector. It currently has a Zacks Industry Rank #103, which places it in the top 42% of more than 246 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few audio-video production stocks you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.
Industry Outperforms the Sector and S&P 500
The Zacks Audio Video Production industry has outperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.
The industry has jumped 50.8% over this period compared with the S&P 500’s growth of 18.8%. The broader sector has surged 20.5% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
Price-to-earnings is commonly used for valuing audio-video production stocks. The industry has a forward 12-month P/E of 24.36X compared with the S&P 500’s 23.59X. It is above the sector’s forward 12-month P/E of 20.17X.
In the past five years, the industry has traded as high as 24.36X and as low as 15.8X, with a median of 18.41X, as the chart below shows.
Price-to-Earnings Forward Ratio (Past Five Years)
3 Audio Video Production Stocks to Keep an Eye on
Sonos: Headquartered in Santa Barbara, CA, Sonos operates as a consumer electronics company primarily involved in the manufacturing of speakers with immersive sound experiences.
Sonos’ performance is gaining from stronger-than-anticipated sales of portables and components. It is also benefiting from an expanded geographic footprint amid the complex macroeconomic backdrop. Frequent product innovation and the addition of new features to existing products bode well. In the fiscal third quarter, it introduced AI-powered voice enhancement for Arc Ultra and advanced adaptive noise cancellation for Sonos Ace. With the launch of Sonos Ace, its first over-the-ear Bluetooth headphone, the company has forayed into the personal listening category. Sales of Sonos Ace are cushioning the top line.
It has moved the majority of U.S.-bound production out of China to Vietnam and Malaysia, limiting exposure to China tariffs to a few accessories and co-branded products. The company is actively evaluating pricing and promotional strategies, collaborating with contract manufacturers and retailers to limit downstream impact on consumers.
Although it temporarily paused buyback in the third-quarter fiscal 2025, it still prioritizes returns, with $150 million remaining authorized. For the fiscal fourth quarter, Sonos projects revenues of $260-$290 million, up 2-14% year over year.
The Zacks Consensus Estimate for its fiscal 2025 bottom line is pegged at 59 cents, unchanged in the past seven days. Shares have gained 23.7% in the past year.
Price and Consensus: SONO
Dolby Laboratories: San Francisco-based Dolby Laboratories develops audio and imaging technologies that revolutionize entertainment for user-generated content, TV shows, films, music and gaming.
Dolby continues to see strong engagement across its ecosystem of creators, distributors and device OEMs for its Dolby Atmos and Dolby Vision technologies. DLB recently launched Dolby Vision 2, the next-generation evolution of its superior picture quality innovation. With Dolby Vision 2, the firm is enhancing the television experience, aligning with the capabilities of next-generation displays while empowering creators with new possibilities.
Dolby is extending its presence in the automotive market, driven by strong demand from OEMs to elevate in-car entertainment quality. It recently announced that 30 of the world's leading car brands, including German automakers Mercedes-Benz, Audi and Porsche, have either implemented or announced plans to integrate Dolby Atmos sound into their cars. This number is twice as many as the previous year.
The company sees significant expansion opportunities in Dolby Atmos, Dolby Vision and its imaging patents, which have grown at a compound annual rate of around 20% over the past four years. Looking ahead, the company is targeting growth in the range of 15% to 25%.
However, concerns persist due to macroeconomic weakness, ongoing tariff uncertainty, softness in device sales and intense competition.
At present, DLB carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its fiscal 2025 bottom line is pegged at $3.96, unchanged in the past seven days. Shares have declined 0.7% in the past year.
Price and Consensus: DLB
GoPro: Headquartered in San Mateo, CA, GoPro is one of the leading manufacturers of the world's most handy cameras, as well as mountable and wearable accessories.
GoPro is well-positioned to gain from product launches, expanding subscription revenues, backed by improving retention rates and extensive cost discipline measures. The company is set to introduce a diversified range of hardware and software products in the second half of 2025, which it expects will drive a return to revenue growth and profitability beginning in the fourth quarter of 2025. For the third quarter of 2025, operating expenses are projected at $60 million (+/- $1 million), down 34% from the prior year due to reduced headcount, lower marketing spend and decreased nonrecurring engineering costs following GP3’s completion. The company continues to anticipate operating expenses for 2025 to be between $240 million and $250 million. This is down more than $100 million or 30% from 2024.
It expects to offset half of tariff costs with modest price increases, supply-chain diversification outside of China and potentially producing certain products domestically. It anticipates tariffs on its cameras and accessories to total about $18 million in 2025, up from $8 million as rates rise to 20% from 10%.
GoPro also launched a new opt-in program that allows domestic subscribers to monetize their cloud-based video content by contributing it to help train third-party AI models. The subscribers will pocket 50% of the license revenue that GoPro generates on their behalf.
Nonetheless, GoPro projects lower unit sales and revenue growth for 2025 due to tough macroeconomic conditions and stiff competition. For the third quarter, the company projects revenues of $160 million (+/- $10 million), down 38% year over year.
At present, GPRO carries a Zacks Rank #3. The Zacks Consensus Estimate for its 2025 bottom line is pegged at a loss of 14 cents, unchanged in the past seven days. Shares have skyrocketed 119.8% in the past year.
Price and Consensus: GPRO
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3 Audio Video Stocks to Focus on From a Flourishing Industry
The Zacks Audio Video Production industry participants like Dolby Laboratories, Inc. (DLB - Free Report) , Sonos, Inc. (SONO - Free Report) and GoPro, Inc. (GPRO - Free Report) are likely to benefit from investments in cutting-edge technology solutions that create better communication experiences. The players also stand to gain as they increase focus on direct-to-customer sales channels. Rapid technological advances, such as 4K, 8K and immersive audio formats, are boosting demand for new devices, which bodes well for participants like GoPro and Dolby.
However, global macroeconomic uncertainty amid escalating trade tensions, tariffs and associated inflationary pressure is likely to keep consumer spending in check. This does not bode well for the participants. A highly promotional environment and stiff competition from importers of comparatively low-priced devices are denting margins. Online accessibility of recording equipment and the availability of distribution channels on the Internet are additional headwinds.
Industry Description
The Zacks Audio Video Production industry comprises television, speaker, video player and camcorder manufacturers. It includes companies that offer gaming consoles, drones and high-end cameras for individuals and industrial markets. These firms provide state-of-the-art audio, imaging and voice technologies that enhance entertainment and communication experiences. Some industry participants develop audio and imaging products, including digital cinema servers and products for film production and entertainment industries. Apart from providing theatrical and television production services for cinema exhibitions, broadcast and home entertainment, these companies work with film studios, content creators, broadcasters and video game designers. Some prominent players are present in the music and image-based software markets worldwide.
4 Trends Shaping the Future of the Audio-Video Production Industry
Technological Advancement to Spur Growth: From rapid technological advances like 4K, 8K and immersive audio formats, the demand for high-resolution visual and audio experiences is a major growth driver. The rise of streaming or OTT platforms is fueling this trend, as consumers and businesses seek to recreate a cinematic atmosphere at home.
Increasing Demand for Premium Entertainment: The industry performed well despite drastic changes in how media is consumed and distributed. The rise in demand for premium entertainment from record labels, TV producers and advertisers is likely to stoke profitable growth. Strong demand across all regions with a more direct-to-consumer, subscription-centric model bodes well for industry participants.
Macroeconomic Headwinds Likely to Hurt Consumer Demand: The global macroeconomic uncertainty, amid escalating trade tensions and tariffs, and associated inflationary pressures, are likely to keep consumer spending, especially discretionary purchases, in check. While companies keep investing in market share gains and supply chain resilience, a shortage of critical hardware components due to disruption in the supply chain could hurt revenues in the near term. Fluctuations in commodity pricing for different components are additional concerns. Elevated promotional activity to boost sales amid weak spending is also affecting the performance of these industry participants.
Aggressive Competition: In the United States, smart-connected televisions, microphones and speaker enclosures are the most popular electronic devices among customers. However, U.S.-based manufacturers of audio and video systems face intense competition from importers of comparatively low-priced devices, particularly from China, Vietnam and Mexico. These firms face stiff competition across all end markets, often leading to intense price wars and margin contraction.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Audio Video Production industry is housed within the broader Zacks Consumer Discretionary sector. It currently has a Zacks Industry Rank #103, which places it in the top 42% of more than 246 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few audio-video production stocks you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.
Industry Outperforms the Sector and S&P 500
The Zacks Audio Video Production industry has outperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.
The industry has jumped 50.8% over this period compared with the S&P 500’s growth of 18.8%. The broader sector has surged 20.5% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
Price-to-earnings is commonly used for valuing audio-video production stocks. The industry has a forward 12-month P/E of 24.36X compared with the S&P 500’s 23.59X. It is above the sector’s forward 12-month P/E of 20.17X.
In the past five years, the industry has traded as high as 24.36X and as low as 15.8X, with a median of 18.41X, as the chart below shows.
Price-to-Earnings Forward Ratio (Past Five Years)
3 Audio Video Production Stocks to Keep an Eye on
Sonos: Headquartered in Santa Barbara, CA, Sonos operates as a consumer electronics company primarily involved in the manufacturing of speakers with immersive sound experiences.
Sonos’ performance is gaining from stronger-than-anticipated sales of portables and components. It is also benefiting from an expanded geographic footprint amid the complex macroeconomic backdrop. Frequent product innovation and the addition of new features to existing products bode well. In the fiscal third quarter, it introduced AI-powered voice enhancement for Arc Ultra and advanced adaptive noise cancellation for Sonos Ace. With the launch of Sonos Ace, its first over-the-ear Bluetooth headphone, the company has forayed into the personal listening category. Sales of Sonos Ace are cushioning the top line.
It has moved the majority of U.S.-bound production out of China to Vietnam and Malaysia, limiting exposure to China tariffs to a few accessories and co-branded products. The company is actively evaluating pricing and promotional strategies, collaborating with contract manufacturers and retailers to limit downstream impact on consumers.
Although it temporarily paused buyback in the third-quarter fiscal 2025, it still prioritizes returns, with $150 million remaining authorized. For the fiscal fourth quarter, Sonos projects revenues of $260-$290 million, up 2-14% year over year.
At present, SONO carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for its fiscal 2025 bottom line is pegged at 59 cents, unchanged in the past seven days. Shares have gained 23.7% in the past year.
Price and Consensus: SONO
Dolby continues to see strong engagement across its ecosystem of creators, distributors and device OEMs for its Dolby Atmos and Dolby Vision technologies. DLB recently launched Dolby Vision 2, the next-generation evolution of its superior picture quality innovation. With Dolby Vision 2, the firm is enhancing the television experience, aligning with the capabilities of next-generation displays while empowering creators with new possibilities.
Dolby is extending its presence in the automotive market, driven by strong demand from OEMs to elevate in-car entertainment quality. It recently announced that 30 of the world's leading car brands, including German automakers Mercedes-Benz, Audi and Porsche, have either implemented or announced plans to integrate Dolby Atmos sound into their cars. This number is twice as many as the previous year.
The company sees significant expansion opportunities in Dolby Atmos, Dolby Vision and its imaging patents, which have grown at a compound annual rate of around 20% over the past four years. Looking ahead, the company is targeting growth in the range of 15% to 25%.
However, concerns persist due to macroeconomic weakness, ongoing tariff uncertainty, softness in device sales and intense competition.
At present, DLB carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its fiscal 2025 bottom line is pegged at $3.96, unchanged in the past seven days. Shares have declined 0.7% in the past year.
Price and Consensus: DLB
GoPro is well-positioned to gain from product launches, expanding subscription revenues, backed by improving retention rates and extensive cost discipline measures. The company is set to introduce a diversified range of hardware and software products in the second half of 2025, which it expects will drive a return to revenue growth and profitability beginning in the fourth quarter of 2025. For the third quarter of 2025, operating expenses are projected at $60 million (+/- $1 million), down 34% from the prior year due to reduced headcount, lower marketing spend and decreased nonrecurring engineering costs following GP3’s completion. The company continues to anticipate operating expenses for 2025 to be between $240 million and $250 million. This is down more than $100 million or 30% from 2024.
It expects to offset half of tariff costs with modest price increases, supply-chain diversification outside of China and potentially producing certain products domestically. It anticipates tariffs on its cameras and accessories to total about $18 million in 2025, up from $8 million as rates rise to 20% from 10%.
GoPro also launched a new opt-in program that allows domestic subscribers to monetize their cloud-based video content by contributing it to help train third-party AI models. The subscribers will pocket 50% of the license revenue that GoPro generates on their behalf.
Nonetheless, GoPro projects lower unit sales and revenue growth for 2025 due to tough macroeconomic conditions and stiff competition. For the third quarter, the company projects revenues of $160 million (+/- $10 million), down 38% year over year.
At present, GPRO carries a Zacks Rank #3. The Zacks Consensus Estimate for its 2025 bottom line is pegged at a loss of 14 cents, unchanged in the past seven days. Shares have skyrocketed 119.8% in the past year.
Price and Consensus: GPRO