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Why Is Dolby Laboratories (DLB) Up 11.5% Since Last Earnings Report?
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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 11.5% 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 drivers.
Dolby Q4 Earnings Top Estimates, Revenues Fall Y/Y
Dolby reported unimpressive fourth-quarter fiscal 2020 (ended Sep 25, 2020) results, with the top line and the bottom line decreasing on a year-over-year basis. Lower revenues from product and services segment coupled with sluggish global cinema market due to COVID-19 adversities marred the quarterly performance.
Net Income
On a GAAP basis, net income for the quarter was $26.8 million or 26 cents per share compared with $43.9 million or 43 cents per share in the year-ago quarter. The year-over-year deterioration was primarily caused by top-line contraction.
Non-GAAP net income came in at $45.8 million or 45 cents per share compared with $67.6 million or 66 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
On a GAAP basis, fiscal 2020 net income was $231.4 million or $2.25 per share compared with $255.2 million or $2.44 per share in the prior fiscal year. On a non-GAAP basis, fiscal 2020 net income decreased to $305.2 million or $2.97 per share from $334.6 million or $3.20 per share a year ago.
Revenues
Quarterly revenues came in at $271.2 million, down 9.2% from $298.8 million in the year-ago quarter. The decline was largely caused by the COVID-19 pandemic, which led to temporary business shutdowns and lower consumer activity globally, particularly in products and services segment. Nevertheless, the top line surpassed the Zacks Consensus Estimate of $242 million. In fiscal 2020, Dolby reported total revenues of $1,161.8 million compared with $1,241.6 million in fiscal 2019.
Segmental Performance
Despite year-over-year higher revenues in Broadcast business, revenues from Licensing came in at $256.9 million, down 3% year over year from $264.8 million. The decline was primarily caused by lower recoveries stemming from the COVID-19 pandemic. However, it was partially offset by higher adoption of TVs and set-top boxes with a solid traction in both Dolby Vision and Dolby Atmos.
Sales from Consumer Electronics and Mobile Devices were down nearly 8% and 13%, respectively, from prior-year quarter’s figure owing to lower recoveries. Revenues from Other Markets fell nearly 19% owing to a decline in revenues from Dolby Cinema as a result of COVID-19 restrictions coupled with lower gaming revenues. Meanwhile, sales from PC were up about 26% year over year, driven by higher adoption of Dolby Technologies.
Products and services revenues came in at $14.3 million, down 58% year over year. The downside was primarily caused by the impact of the virus outbreak on the Cinema business as social distancing norms led to movie theatre closures.
Other Details
Gross profit in the fiscal fourth quarter was $228.7 million compared with $252.9 million in the year-earlier quarter. Total operating expenses fell 1.5% to $198.7 million, primarily due to lower restructuring charges. Operating income was $30.1 million compared with $51.2 million in the year-ago quarter.
Cash Flow & Liquidity
In fourth-quarter fiscal 2020, Dolby generated $112.7 million of net cash from operating activities compared with $130.5 million in the year-ago quarter. Cash flow from operations was $343.8 million in fiscal 2020 compared with $327.7 million in fiscal 2019. As of Sep 25, 2020, the company had $1,071.9 million in cash and cash equivalents with $122.2 million of other non-current liabilities compared with the respective tallies of $797.2 million and $177.5 million a year ago.
Outlook
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for the first and the second quarters of fiscal 2021.
For first-quarter fiscal 2021, the company expects GAAP earnings in the range of 70-85 cents per share and non-GAAP earnings in the range of 97 cents to $1.12 per share on revenues of $330-$360 million. Unit volume shipments across various end markets and devices are likely to be lower due to COVID-19 adversities. On a GAAP basis, operating expenses are expected in the $207-$219 million band, whereas on a non-GAAP basis, operating expenses are projected in the range of $175-$185 million. For second-quarter fiscal 2021, Dolby expects revenues in the range of $270-$300 million.
However, macroeconomic factors like unemployment and supply chain disruptions might hurt Dolby’s near-term performance. Although its licensing as well as products and services revenues are likely to be affected by the coronavirus, Dolby remains 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 upward during the past month. The consensus estimate has shifted 113.22% due to these changes.
VGM Scores
Currently, Dolby Laboratories has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dolby Laboratories has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Dolby Laboratories (DLB) Up 11.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have added about 11.5% 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 drivers.
Dolby Q4 Earnings Top Estimates, Revenues Fall Y/Y
Dolby reported unimpressive fourth-quarter fiscal 2020 (ended Sep 25, 2020) results, with the top line and the bottom line decreasing on a year-over-year basis. Lower revenues from product and services segment coupled with sluggish global cinema market due to COVID-19 adversities marred the quarterly performance.
Net Income
On a GAAP basis, net income for the quarter was $26.8 million or 26 cents per share compared with $43.9 million or 43 cents per share in the year-ago quarter. The year-over-year deterioration was primarily caused by top-line contraction.
Non-GAAP net income came in at $45.8 million or 45 cents per share compared with $67.6 million or 66 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
On a GAAP basis, fiscal 2020 net income was $231.4 million or $2.25 per share compared with $255.2 million or $2.44 per share in the prior fiscal year. On a non-GAAP basis, fiscal 2020 net income decreased to $305.2 million or $2.97 per share from $334.6 million or $3.20 per share a year ago.
Revenues
Quarterly revenues came in at $271.2 million, down 9.2% from $298.8 million in the year-ago quarter. The decline was largely caused by the COVID-19 pandemic, which led to temporary business shutdowns and lower consumer activity globally, particularly in products and services segment. Nevertheless, the top line surpassed the Zacks Consensus Estimate of $242 million. In fiscal 2020, Dolby reported total revenues of $1,161.8 million compared with $1,241.6 million in fiscal 2019.
Segmental Performance
Despite year-over-year higher revenues in Broadcast business, revenues from Licensing came in at $256.9 million, down 3% year over year from $264.8 million. The decline was primarily caused by lower recoveries stemming from the COVID-19 pandemic. However, it was partially offset by higher adoption of TVs and set-top boxes with a solid traction in both Dolby Vision and Dolby Atmos.
Sales from Consumer Electronics and Mobile Devices were down nearly 8% and 13%, respectively, from prior-year quarter’s figure owing to lower recoveries. Revenues from Other Markets fell nearly 19% owing to a decline in revenues from Dolby Cinema as a result of COVID-19 restrictions coupled with lower gaming revenues. Meanwhile, sales from PC were up about 26% year over year, driven by higher adoption of Dolby Technologies.
Products and services revenues came in at $14.3 million, down 58% year over year. The downside was primarily caused by the impact of the virus outbreak on the Cinema business as social distancing norms led to movie theatre closures.
Other Details
Gross profit in the fiscal fourth quarter was $228.7 million compared with $252.9 million in the year-earlier quarter. Total operating expenses fell 1.5% to $198.7 million, primarily due to lower restructuring charges. Operating income was $30.1 million compared with $51.2 million in the year-ago quarter.
Cash Flow & Liquidity
In fourth-quarter fiscal 2020, Dolby generated $112.7 million of net cash from operating activities compared with $130.5 million in the year-ago quarter. Cash flow from operations was $343.8 million in fiscal 2020 compared with $327.7 million in fiscal 2019. As of Sep 25, 2020, the company had $1,071.9 million in cash and cash equivalents with $122.2 million of other non-current liabilities compared with the respective tallies of $797.2 million and $177.5 million a year ago.
Outlook
Despite uncertainties pertaining to the virus outbreak, Dolby provided guidance for the first and the second quarters of fiscal 2021.
For first-quarter fiscal 2021, the company expects GAAP earnings in the range of 70-85 cents per share and non-GAAP earnings in the range of 97 cents to $1.12 per share on revenues of $330-$360 million. Unit volume shipments across various end markets and devices are likely to be lower due to COVID-19 adversities. On a GAAP basis, operating expenses are expected in the $207-$219 million band, whereas on a non-GAAP basis, operating expenses are projected in the range of $175-$185 million. For second-quarter fiscal 2021, Dolby expects revenues in the range of $270-$300 million.
However, macroeconomic factors like unemployment and supply chain disruptions might hurt Dolby’s near-term performance. Although its licensing as well as products and services revenues are likely to be affected by the coronavirus, Dolby remains 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 upward during the past month. The consensus estimate has shifted 113.22% due to these changes.
VGM Scores
Currently, Dolby Laboratories has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dolby Laboratories has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.