Dolby Laboratories, Inc. (DLB) stock analysis

P/E below its 5-year median

Dolby Laboratories's P/E of 27.5 is below its own 5-year median of 31.8.

P/E above the industry

Dolby Laboratories's P/E of 27.5 is above the Miscellaneous Investing median of 26.3.

EV/EBITDA below its 5-year median

Dolby Laboratories's EV/EBITDA of 16.3 is below its 5-year median of 20.5.

P/B above the industry

Dolby Laboratories's price-to-book of 2.34 is above the Miscellaneous Investing median of 1.20.

Trading above fair value

The share price of $64.66 is above our fair value estimate of $60.97.

Margin of safety under 20%

The price is 6.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 2.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 13.1% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -14.4% over the last twelve months, against a 5-year average of 2.0% a year.

Growing slower than the industry

Revenue grew 0.6% over the last twelve months; the Miscellaneous Investing median is 4.6%.

Guidance raised

Dolby Laboratories raised its full year of fiscal 2026 Effective tax rate outlook on Jul 30, 2026.

Gross margin slipping

Gross margin was 87.6% over the last twelve months, against 88.5% a year earlier.

Return on equity under 15%

Return on equity was 8.7% over the last twelve months and averaged 9.9% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 10.5%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Dolby Laboratories's return on equity of 8.7% is above the Miscellaneous Investing median of 3.1%.

Earnings grew over 5 years

Net income grew 2.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 16.7% over the last twelve months, against a 5-year average of 18.8%.

Net margin above the industry

Dolby Laboratories's net margin of 16.7% is above the Miscellaneous Investing median of 10.3%.

No debt

Dolby Laboratories has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term assets cover short-term debts

Current assets are 3.19 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 8.62; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Dolby Laboratories paid dividends worth 2.2% of the share price over the last twelve months.

Yield below Treasuries

The 2.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Dolby Laboratories yields 2.2%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 59.4% of net income.

Covered by free cash flow

Dividends take 34.2% of free cash flow.