Dolby Laboratories (DLB): Rethinking Valuation After a Flat Month and Double-Digit Year-to-Date Decline

Dolby Laboratories (DLB) has been quietly navigating a mixed stretch, with the stock roughly flat over the month but still down double digits this year, even as revenue and earnings continue to grow.

See our latest analysis for Dolby Laboratories.

At a share price of about $66.80, Dolby’s year to date share price return of negative 14.1 percent contrasts with a modestly positive three year total shareholder return of 2.7 percent. This suggests longer term momentum has softened even as underlying growth continues.

If Dolby’s mixed returns have you rethinking your watchlist, this could be a good time to explore high growth tech and AI stocks that may offer a stronger blend of growth and innovation potential.

With revenues and profits still rising and the shares trading at a sizeable discount to analyst targets, is Dolby quietly undervalued, or is the market already baking in all the growth investors can reasonably expect?

Most Popular Narrative Narrative: 26.2% Undervalued

Against a last close of $66.80, the most widely followed narrative anchors Dolby’s value far higher, framing today’s price as a sizeable gap to intrinsic worth.

Strategic expansion into direct-to-consumer apps and services (e.g., Dolby.io, cloud-based audio tools) provides new, higher-margin recurring revenue streams that diversify away from cyclical hardware markets, supporting improved earnings quality and margin uplift over time.

Read the complete narrative.

Want to see how steady revenue gains, rising margins and a richer earnings mix combine into a premium future multiple and fair value? The narrative spells out the growth runway, the profit step up and the valuation bridge in detail, but keeps one key assumption hidden in plain sight. Curious which long term earnings profile is baked into that target price and how it stacks up against typical software names? Read on to unpack the full story behind these projections.

Result: Fair Value of $90.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, accelerating commoditization in core devices and rising adoption of royalty free codecs could reduce Dolby’s pricing power and slow its long-term growth.

Find out about the key risks to this Dolby Laboratories narrative.

Build Your Own Dolby Laboratories Narrative

If you see Dolby’s story differently or want to stress test the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Dolby Laboratories research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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