The 10-second takeaway
For the quarter ended March 29 (Q2), Dolby Laboratories beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share contracted significantly. GAAP earnings per share shrank significantly.
Margins dropped across the board.
Dolby Laboratories tallied revenue of $249.3 million. The seven analysts polled by S&P Capital IQ predicted revenue of $246.1 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.74. The seven earnings estimates compiled by S&P Capital IQ predicted $0.68 per share. Non-GAAP EPS of $0.74 for Q2 were 19% lower than the prior-year quarter's $0.91 per share. GAAP EPS of $0.60 for Q2 were 26% lower than the prior-year quarter's $0.81 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 90.7%, 20 basis points worse than the prior-year quarter. Operating margin was 33.8%, much worse than the prior-year quarter. Net margin was 24.8%, 910 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $208.9 million. On the bottom line, the average EPS estimate is $0.43.
Next year's average estimate for revenue is $920.4 million. The average EPS estimate is $2.09.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 3,871 members out of 3,972 rating the stock outperform, and 101 members rating it underperform. Among 1,092 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,075 give Dolby Laboratories a green thumbs-up, and 17 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Dolby Laboratories is hold, with an average price target of $32.33.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Dolby Laboratories. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.