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"We rate DOLBY LABORATORIES INC (DLB) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DLB's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 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 4.69, 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 100.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.24% significantly outperformed against the industry average.
- Net operating cash flow has increased to $99.17 million or 47.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.90%.
- DOLBY LABORATORIES INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DOLBY LABORATORIES INC increased its bottom line by earning $1.98 versus $1.83 in the prior year. For the next year, the market is expecting a contraction of 21.5% in earnings ($1.56 versus $1.98).
- You can view the full analysis from the report here: DLB Ratings Report