Analyzing Dolby Laboratories (DLB) and Sony (SNE)

Dolby Laboratories (NYSE: DLB) and Sony (NYSE:SNE) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, earnings, profitability and risk.

Analyst Recommendations

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This is a summary of current ratings and target prices for Dolby Laboratories and Sony, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 3 1 0 2.25
Sony 0 4 2 1 2.57

Dolby Laboratories currently has a consensus price target of $62.00, indicating a potential downside of 2.45%. Sony has a consensus price target of $46.92, indicating a potential downside of 2.93%. Given Dolby Laboratories’ higher probable upside, analysts clearly believe Dolby Laboratories is more favorable than Sony.

Insider & Institutional Ownership

53.3% of Dolby Laboratories shares are held by institutional investors. Comparatively, 7.0% of Sony shares are held by institutional investors. 43.8% of Dolby Laboratories shares are held by company insiders. Comparatively, 7.0% of Sony shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Dolby Laboratories has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, Sony has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Profitability

This table compares Dolby Laboratories and Sony’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dolby Laboratories 6.06% 12.02% 10.15%
Sony 6.29% 15.00% 2.73%

Earnings & Valuation

This table compares Dolby Laboratories and Sony’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.08 billion 6.08 $201.80 million $2.20 28.89
Sony $67.89 billion 0.90 $681.58 million $0.51 94.78

Sony has higher revenue and earnings than Dolby Laboratories. Dolby Laboratories is trading at a lower price-to-earnings ratio than Sony, indicating that it is currently the more affordable of the two stocks.

Dividends

Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Sony pays an annual dividend of $0.10 per share and has a dividend yield of 0.2%. Dolby Laboratories pays out 29.1% of its earnings in the form of a dividend. Sony pays out 19.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dolby Laboratories has raised its dividend for 3 consecutive years and Sony has raised its dividend for 2 consecutive years. Dolby Laboratories is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Sony beats Dolby Laboratories on 10 of the 18 factors compared between the two stocks.

About Dolby Laboratories

Dolby Laboratories, Inc. designs and manufactures audio and imaging products for the cinema, television, broadcast and entertainment industries. Its products for cinema include Digital Cinema Servers and Cinema Audio Products, and broadcast and other include Dolby Conference Phone and Other Products. It offers services to support theatrical and television production for cinema exhibition, broadcast and home entertainment, including equipment training and maintenance, mixing room alignment and equalization, as well as audio, color and light image calibration. Its technologies include Advanced Audio Coding and High Efficiency Advanced Audio Coding, Dolby AC-4, Dolby Atmos, Dolby Digital, Dolby Digital Plus, Dolby TrueHD, Dolby Vision, Dolby Voice and High Efficiency Video Coding. It distributes its products in over 80 countries. Its technologies are incorporated in offerings in various end markets, such as the broadcast, Personal Computer, mobile, consumer electronics and other markets.

About Sony

Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. It offers LCD televisions, optical pickups, mobile phones, tablets, audio equipment and video conference systems, batteries, broadcast and professional-use video equipment, and DVD-players/recorders; and Blu-ray Disc players and recorders, ROMs, CDs, DVDs, and UMDs. The company also provides Internet broadband network services to subscribers, as well as creates and distributes content through its portal services to various electronics product platforms, such as PCs and mobile phones; and interchangeable lens cameras, compact digital cameras, and consumer and professional video cameras, as well as display products comprising projectors and medical equipment. In addition, it offers PlayStation hardware, including home and portable game consoles; network services relating to game, video, and music content; and packaged software and peripheral devices, as well as complementary metal oxide semiconductor image sensors, charge-coupled devices, large-scale integration systems, and other semiconductors. Further, the company produces, acquires, and distributes live-action and animated motion pictures, as well as television programming, including scripted series, daytime serials, game shows, animated series, made for television movies and miniseries, and other programming; operates a visual effects and animation unit; manages a studio facility; and operates television and digital networks. Additionally, it produces and distributes recorded music, animation titles, and game applications; engages in music publishing business; and provides life and non-life insurance, savings products, and loans. The company was formerly known as Tokyo Tsushin Kogyo Kabushiki Kaisha and changed its name to Sony Corporation in January 1958. Sony Corporation was founded in 1946 and is headquartered in Tokyo, Japan.

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