Dolby Laboratories Common Stock (DLB)

FairStock Score: 43/100 — MIXED

Key Financials

Strengths

• Generates $367 million in annual free cash flow (6.1% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Conservative balance sheet with debt-to-equity of just 0.02, providing financial flexibility
• Altman Z-Score of 7.8 confirms minimal bankruptcy risk and strong solvency
• Attractive 2.1% dividend yield providing steady income returns

Concerns

• Trades significantly above Graham Number ($39) with negative 62% margin of safety—limited downside protection
• Revenue declining at 2.9% year-over-year signals potential demand weakness or market share loss

AI Analysis

Dolby Laboratories Common Stock is a small-cap industrials company valued at $6.0 billion. The business generates $1.3 billion in annual revenue with a 4.0% net margin and $367 million in free cash flow. From a quality standpoint, Dolby shows solid Piotroski F-Score of 7/9 and Altman Z-Score of 7.8 confirms fortress-level solvency. On valuation, the stock is trading at a premium 25.5x earnings, with trades above its Graham Number with a negative 62% margin. Growth dynamics show revenue growing at -2.9% and profit growth of -21.4%. The 2.1% dividend yield adds an income component for patient holders. Our composite FairStock Score of 43/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $367 million in annual free cash flow (6.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the industrials space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer