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Dolby Laboratories (DLB) AI Stock Analysis

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Dolby Laboratories

(NYSE:DLB)

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Outperform 77 (OpenAI - 5.2)

Rating:77Outperform

Price Target:

$68.00

▲(36.38% Upside)

Action:Reiterated

Date:08/04/26

DLB’s score is driven primarily by strong underlying financial quality—exceptional margins, strong free-cash-flow generation, and a very conservative balance sheet. The latest earnings call supports the outlook with strong Q4/FY26 guidance and continued shareholder returns, but execution and timing risks around large deals/MVCs remain. Technically, the uptrend is intact, though overbought indicators raise near-term pullback risk, and valuation looks only moderately attractive at ~24.7x earnings despite the ~2.4% yield.

Positive Factors

Licensing business model & patent moat

Dolby's core licensing model and extensive patent/trademark portfolio generate recurring per-unit royalties and multiyear agreements with device makers, chip vendors and content platforms. That creates durable, scalable revenue streams tied to device/content cycles and certification stickiness, supporting steady cash flow over multiple device generations.

Negative Factors

Revenue decline & growth volatility

A sharp TTM revenue decline and only modest annual growth in recent years point to uneven demand and mix shifts. Persistent top-line volatility makes earnings and cash-flow forecasting harder, can compress reinvestment capacity, and may slow the pace of long-term margin or return expansion over the next several quarters.

Read all positive and negative factors

Positive Factors

Negative Factors

Licensing business model & patent moat

Read all positive factors

Dolby Laboratories Key Performance Indicators (KPIs)

Any

Remaining Performance Obligations

Remaining Performance Obligations
Represents the value of contracted revenue yet to be recognized, offering insight into future revenue streams and business stability.

Chart InsightsRPO jumped sharply in late‑2023 and remained elevated before drifting down through early‑2026, signaling a big wave of licensing recoveries and multi‑period contracts that are now being recognized. Management’s commentary (a large Q2 recovery, expanding OEM/streaming licenses, and growing foundational patents) explains the backlog-driven upside, but the gradual decline warns bookings haven’t consistently replaced recognized revenue—investors should watch new high‑value licensing wins and minimum‑volume commitments to judge whether revenue visibility is becoming sustainably stronger or just timing‑driven.

Data provided by:

The Fly

Dolby Laboratories (DLB) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.79B

Dividend Yield2.32%

Average Volume (3M)920.53K

Price to Earnings (P/E)26.1

Beta (1Y)0.84

Revenue Growth0.55%

EPS Growth-13.85%

CountryUS

Employees2,051

SectorIndustrials

Sector Strength72

IndustryInformation Technology Services

Share Statistics

EPS (TTM)2.38

Shares Outstanding59,416,893

10 Day Avg. Volume794,841

30 Day Avg. Volume920,530

Financial Highlights & Ratios

PEG Ratio-9.32

Price to Book (P/B)2.65

Price to Sales (P/S)5.14

P/FCF Ratio16.13

Enterprise Value/Market Cap<0.01

Enterprise Value/Revenue<0.01

Enterprise Value/Gross Profit<0.01

Enterprise Value/Ebitda<0.01

Forecast

1Y Price Target

$87.50

Price Target Upside75.49% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

EPS Forecast (FY)4.32

Revenue Forecast (FY)$1.42B

Dolby Laboratories Business Overview & Revenue Model

Company Description

Dolby Laboratories, Inc. develops pioneering audio and visual technologies designed to enhance entertainment and communication experiences across a broad spectrum of platforms. These include cinematic venues, digital television, various transmissi...

How the Company Makes Money

Dolby primarily makes money by licensing its proprietary technologies and collecting royalties tied to the use of Dolby audio and imaging solutions in products and content distribution. A major revenue stream comes from licensing agreements with c...

Dolby Laboratories Earnings Call Summary

Earnings Call Date:Jul 30, 2026

(Q3-2026)

% Change Since: |

Next Earnings Date:Nov 12, 2026

Earnings Call Sentiment Positive

The call conveyed a broadly positive outlook driven by strong Q4 guidance (midpoint implying ~23% YoY growth), strategic momentum in high-growth initiatives (VDP, OptiView, auto, Dolby Atmos/Vision adoption), robust margins (~90% non-GAAP gross margin), healthy cash flow ($167M) and an active capital return program (buybacks and dividend +9%). Key risks include timing-dependency of some revenue (large deals and MVCs), memory cost pressure on mobile/PC that could reduce device volumes, modest declines in foundational audio/PC, and some one-time tax and restructuring impacts. Overall, the positive strategic progress and financial strength outweigh the near-term risks and timing volatility.

Positive Updates

Q3 Revenue and EPS in Guidance

Reported revenue of $305M for Q3 FY26 (within prior guidance) and non-GAAP EPS of $0.69 (just above midpoint of guidance). Licensing revenue was $282M and products & services $23M.

Negative Updates

Dependence on Timing of Large Deals and MVCs

Management acknowledged that strong Q4 guidance is driven in part by timing (large VDP deal with Meta signed early in Q4 and minimum volume commitments that are back-end loaded), creating quarter-to-quarter volatility and potential sustainability/timing risk.

Read all updates

Q3-2026 Updates

Positive

Negative

Q3 Revenue and EPS in Guidance

Reported revenue of $305M for Q3 FY26 (within prior guidance) and non-GAAP EPS of $0.69 (just above midpoint of guidance). Licensing revenue was $282M and products & services $23M.

Read all positive updates

Company Guidance

Management guided Q4 FY26 revenue of $362–392M (licensing $335–365M) with non‑GAAP gross margin ~90%, non‑GAAP operating expenses $195–205M and non‑GAAP EPS $1.13–1.28 (midpoint implies ~23% YoY revenue growth), citing early‑Q4 VDP deals, higher in‑car Dolby Atmos units, wearables and timing of minimum volume commitments as drivers; for FY26 they expect revenue $1.41–1.44B (licensing $1.31–1.34B), non‑GAAP operating expenses $785–795M, non‑GAAP EPS $4.25–4.40 and about a 100‑basis‑point annual non‑GAAP operating margin improvement (up from prior 50–100 bps range), with other revenue up high‑teens (auto, VDP), broadcast up mid‑single digits, mobile up mid‑single digits, CE flattish, PC down low‑single digits, and Dolby Atmos/Dolby Vision/imaging patents revenue roughly +15% YoY; Q3 actuals to date were $305M revenue ($282M licensing, $23M products & services), non‑GAAP EPS $0.69, operating cash flow ~$167M, $65M buybacks (1.2M shares), $0.36 dividend (+9% YoY), and $756M cash & investments.

Dolby Laboratories Financial Statement Overview

Summary

High-quality financial profile anchored by exceptionally strong gross margins (~88% annual/TTM), consistently positive free cash flow (TTM FCF ~ $345M), and a very conservative balance sheet with minimal leverage (debt-to-equity ~1.8% TTM). The main offset is a weaker near-term growth picture, including a sharp TTM revenue decline and moderation in margins/returns versus 2021 peaks.

Income Statement

Positive

Balance Sheet

Very Positive

Cash Flow

Positive

Breakdown	TTM	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	1.35B	1.35B	1.27B	1.30B	1.25B	1.28B
Gross Profit	1.19B	1.19B	1.13B	1.15B	1.11B	1.15B
EBITDA	372.80M	378.56M	399.81M	345.57M	318.89M	450.37M
Net Income	226.18M	255.02M	261.82M	200.66M	184.09M	310.23M
Balance Sheet
Total Assets	3.16B	3.23B	3.13B	2.99B	2.70B	3.12B
Cash, Cash Equivalents and Short-Term Investments	670.05M	702.60M	577.75M	957.11M	817.58M	1.27B
Total Debt	47.45M	38.88M	46.99M	50.65M	50.94M	72.12M
Total Liabilities	563.89M	595.81M	643.72M	622.38M	451.15M	518.66M
Stockholders Equity	2.58B	2.62B	2.48B	2.36B	2.25B	2.60B
Cash Flow
Free Cash Flow	344.50M	430.26M	297.25M	336.74M	259.12M	393.30M
Operating Cash Flow	437.60M	472.20M	327.25M	367.08M	318.58M	447.75M
Investing Cash Flow	-76.55M	-10.59M	-286.29M	54.21M	-295.94M	-44.91M
Financing Cash Flow	-376.78M	-247.24M	-287.81M	-236.81M	-610.56M	-252.51M

Dolby Laboratories Technical Analysis

Technical Analysis Sentiment

Positive

Last Price49.86

Price Trends

50DMA

53.12

Positive

100DMA

56.18

Positive

200DMA

60.27

Positive

Market Momentum

MACD

2.73

Negative

RSI

76.81

Negative

STOCH

94.69

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLB, the sentiment is Positive. The current price of 49.86 is below the 20-day moving average (MA) of 53.97, below the 50-day MA of 53.12, and below the 200-day MA of 60.27, indicating a bullish trend. The MACD of 2.73 indicates Negative momentum. The RSI at 76.81 is Negative, neither overbought nor oversold. The STOCH value of 94.69 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DLB.

Dolby Laboratories Risk Analysis

Dolby Laboratories disclosed 11 risk factors in its most recent earnings report. Dolby Laboratories reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Dolby Laboratories Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BR	81 Outperform	$18.98B	17.89	40.25%	2.62%	8.19%	40.01%
DLB	77 Outperform	$5.79B	26.09	8.68%	2.83%	0.55%	-13.85%
ACN	76 Outperform	$107.53B	14.12	25.00%	4.44%	6.74%	-0.66%
CTSH	76 Outperform	$25.98B	12.51	14.94%	2.82%	5.64%	-5.39%
INFY	75 Outperform	$49.94B	15.12	33.03%	4.71%	-0.64%	5.69%
IT	68 Neutral	$11.72B	17.31	401.44%	―	0.68%	-31.71%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

* Industrials Sector Average

Performance Comparison

DLB

Dolby Laboratories

62.10

-8.14

-11.59%

ACN

Accenture

178.25

-52.68

-22.81%

Broadridge Financial Solutions

173.40

-84.76

-32.83%

CTSH

Cognizant

58.31

-9.41

-13.89%

Gartner

193.17

-32.81

-14.52%

INFY

Infosys

12.56

-2.93

-18.94%

Dolby Laboratories Corporate Events

Business Operations and StrategyStock BuybackDividendsFinancial Disclosures

Dolby Laboratories Reports Q3 Results, Boosts Share Repurchases

Neutral

Jul 30, 2026

On July 30, 2026, Dolby Laboratories reported third-quarter fiscal 2026 revenue of $305 million, down from $316 million a year earlier, with GAAP net income falling to $29 million, or $0.30 per diluted share, versus $46 million, or $0.48 per share...

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 04, 2026