NEW YORK ( TheStreet) -- Dolby Laboratories (NYSE: DLB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- DLB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.19, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for DOLBY LABORATORIES INC is currently very high, coming in at 95.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.30% significantly outperformed against the industry average.
- Net operating cash flow has increased to $95.79 million or 35.58% when compared to the same quarter last year. In addition, DOLBY LABORATORIES INC has also vastly surpassed the industry average cash flow growth rate of -39.96%.
- DLB, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Electronic Equipment, Instruments & Components industry average, but is less than that of the S&P 500. The net income has decreased by 15.3% when compared to the same quarter one year ago, dropping from $86.39 million to $73.16 million.
-- Written by a member of TheStreet RatingsStaff