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Why Is Dolby Laboratories (DLB) Down 6.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dolby Laboratories due for a breakout? 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 catalysts.
Dolby Q3 Earnings Beat Estimates, Revenues Up Y/Y
Dolby Laboratories, Inc. reported third-quarter fiscal 2022 results, with only the bottom line surpassing the Zacks Consensus Estimate.
Non-GAAP earnings per share were 68 cents compared with 71 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 13.3%.
Total revenues in the third quarter were $289.6 million, up from $286.8 million in the year-ago quarter. The uptick was caused by increased adoption of Dolby Atmos and Dolby Vision, new licensees and imaging patents, along with improved results for the Dolby Cinemas and Cinemas product businesses. The top line missed the Zacks Consensus Estimate by 1.9%
Segmental Performance
Revenues from Licensing were $269.3 million, down year over year from $271.6 million
Broadcast Licensing contributed 37% to the total licensing revenues in the fiscal third quarter. Mobile licensing accounted for 23%, consumer electronics 14%, PC licensing 10% and licensing from other markets contributed 16% to licensing revenues.
Products and services revenues were $20.3 million, up year over year from $15.2 million.
Notably, Dolby Atmos and Dolby Vision was utilized to broadcast the UEFA Champions League Final on Canal+.
Other Details
Gross profit in the fiscal third quarter was $253.6 million compared with $255.2 million in the year-earlier quarter. Total operating expenses increased to $208.1 million from $199.1 million. Operating income was $45.6 million compared with $56.1 million in the year-ago quarter.
In the third quarter, the company repurchased 2.5 million of its common shares and ended the quarter with $230 million of stock repurchase authorization available.
Also, the company has increased the existing share repurchase authorization by $350 million. The total authorization now amounts to nearly $581 million.
Cash Flow and Liquidity
Dolby generated $172.6 million of net cash from operating activities compared with $172.4 million a year ago. As of Jul 1, 2022, the company had $858.9 million in cash and cash equivalents, with $460.4 million in total liabilities.
The company has announced a dividend of 25 cents per share, payable on Aug 31, 2022, to shareholders of record on Aug 23, 2022.
Guidance
Dolby provided guidance for fourth-quarter fiscal 2022.
For the fiscal fourth quarter, the company expects GAAP earnings of 40-55 cents per share and non-GAAP earnings of 68-83 cents per share on revenues of $295-$325 million. On a GAAP basis, operating expenses are expected to be $210-$220 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $180-$190 million.
For fiscal 2022, the company expects GAAP earnings of $1.91-$2.06 per share and non-GAAP earnings of $3.22-$3.37 per share on revenues of $1.27-$1.30 billion. On a GAAP basis, operating expenses are expected to be $901-$911 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $740-$750 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -22.58% due to these changes.
VGM Scores
Currently, Dolby Laboratories has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dolby Laboratories has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Dolby Laboratories (DLB) Down 6.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Dolby Laboratories (DLB - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dolby Laboratories due for a breakout? 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 catalysts.
Dolby Q3 Earnings Beat Estimates, Revenues Up Y/Y
Dolby Laboratories, Inc. reported third-quarter fiscal 2022 results, with only the bottom line surpassing the Zacks Consensus Estimate.
Non-GAAP earnings per share were 68 cents compared with 71 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 13.3%.
Total revenues in the third quarter were $289.6 million, up from $286.8 million in the year-ago quarter. The uptick was caused by increased adoption of Dolby Atmos and Dolby Vision, new licensees and imaging patents, along with improved results for the Dolby Cinemas and Cinemas product businesses. The top line missed the Zacks Consensus Estimate by 1.9%
Segmental Performance
Revenues from Licensing were $269.3 million, down year over year from $271.6 million
Broadcast Licensing contributed 37% to the total licensing revenues in the fiscal third quarter. Mobile licensing accounted for 23%, consumer electronics 14%, PC licensing 10% and licensing from other markets contributed 16% to licensing revenues.
Products and services revenues were $20.3 million, up year over year from $15.2 million.
Notably, Dolby Atmos and Dolby Vision was utilized to broadcast the UEFA Champions League Final on Canal+.
Other Details
Gross profit in the fiscal third quarter was $253.6 million compared with $255.2 million in the year-earlier quarter. Total operating expenses increased to $208.1 million from $199.1 million. Operating income was $45.6 million compared with $56.1 million in the year-ago quarter.
In the third quarter, the company repurchased 2.5 million of its common shares and ended the quarter with $230 million of stock repurchase authorization available.
Also, the company has increased the existing share repurchase authorization by $350 million. The total authorization now amounts to nearly $581 million.
Cash Flow and Liquidity
Dolby generated $172.6 million of net cash from operating activities compared with $172.4 million a year ago. As of Jul 1, 2022, the company had $858.9 million in cash and cash equivalents, with $460.4 million in total liabilities.
The company has announced a dividend of 25 cents per share, payable on Aug 31, 2022, to shareholders of record on Aug 23, 2022.
Guidance
Dolby provided guidance for fourth-quarter fiscal 2022.
For the fiscal fourth quarter, the company expects GAAP earnings of 40-55 cents per share and non-GAAP earnings of 68-83 cents per share on revenues of $295-$325 million. On a GAAP basis, operating expenses are expected to be $210-$220 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $180-$190 million.
For fiscal 2022, the company expects GAAP earnings of $1.91-$2.06 per share and non-GAAP earnings of $3.22-$3.37 per share on revenues of $1.27-$1.30 billion. On a GAAP basis, operating expenses are expected to be $901-$911 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $740-$750 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -22.58% due to these changes.
VGM Scores
Currently, Dolby Laboratories has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dolby Laboratories has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.