Dolby Laboratories, Inc. (NYSE:DLB) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$292m, some 2.1% above estimates, and statutory earnings per share (EPS) coming in at US$0.47, 55% ahead of expectations. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Dolby Laboratories's five analysts is for revenues of US$1.33b in 2020, which would reflect a notable 8.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to bounce 33% to US$2.71. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.33b and earnings per share (EPS) of US$2.70 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$75.00. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Dolby Laboratories at US$85.00 per share, while the most bearish prices it at US$66.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to Dolby Laboratories's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Dolby Laboratories's rate of growth is expected to accelerate meaningfully, with forecast 8.3% revenue growth noticeably faster than its historical growth of 5.4%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 5.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dolby Laboratories is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Dolby Laboratories's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Dolby Laboratories analysts - going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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