Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of audio specialist DTS (Nasdaq: DTSI) played a pleasing note for investors today, rising as much as 12% after the company reported fourth-quarter earnings.

So what: After yesterday's close, DTS drew back the curtain on its fourth-quarter numbers, to resounding investor applause. Revenue for the quarter increased 27% year over year to $26.9 million, easily topping Wall Street's $24.5 million expectations. Earnings per share similarly topped estimates, clocking in at $0.34 versus the expected $0.31. Overall, it was a very successful 2010 for DTS as the company notched total revenue growth -- excluding royalty payments -- of 38% and managed to expand its non-GAAP operating margin from 33% to 38%.

Now what: Blu-ray is a key theme for DTS, since the company's technology is mandated in all Blu-ray players. With that tailwind, along with a growing number of other devices that can use DTS's technology, the company is expecting a strong 2011. Management projects revenue in a range of $100 million to $105 million, continued margin expansion, and EPS of $1.40 to $1.49. If the company can hit those targets, it could crush Wall Street's estimates of $102 million in revenue and $1.15 in EPS.

For investors, DTS has the draw of a smaller up-and-comer that could grow faster than its larger competitor Dolby (NYSE: DLB). However, Motley Fool Stock Advisor favorite Dolby is no slouch when it comes to growth, and even considering DTS's strong 2011 guidance, its stock still trades at a significant premium to Dolby's.

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