Head to Head Survey: Dolby Laboratories (DLB) and InterDigital (IDCC)

Dolby Laboratories (NYSE: DLB) and InterDigital (NASDAQ:IDCC) are both mid-cap consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Profitability

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This table compares Dolby Laboratories and InterDigital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dolby Laboratories 6.06% 12.02% 10.15%
InterDigital 32.70% 26.52% 11.58%

Risk and Volatility

Dolby Laboratories has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, InterDigital has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Dolby Laboratories and InterDigital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 3 1 0 2.25
InterDigital 0 1 3 0 2.75

Dolby Laboratories presently has a consensus price target of $62.00, suggesting a potential downside of 1.60%. InterDigital has a consensus price target of $90.50, suggesting a potential upside of 20.03%. Given InterDigital’s stronger consensus rating and higher possible upside, analysts plainly believe InterDigital is more favorable than Dolby Laboratories.

Dividends

Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 1.9%. Dolby Laboratories pays out 29.1% of its earnings in the form of a dividend. InterDigital pays out 23.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dolby Laboratories has raised its dividend for 3 consecutive years. InterDigital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

53.3% of Dolby Laboratories shares are owned by institutional investors. Comparatively, 74.2% of InterDigital shares are owned by institutional investors. 43.8% of Dolby Laboratories shares are owned by company insiders. Comparatively, 1.9% of InterDigital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Dolby Laboratories and InterDigital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.08 billion 6.03 $201.80 million $2.20 28.64
InterDigital $532.94 million 4.90 $174.29 million $6.06 12.44

Dolby Laboratories has higher revenue and earnings than InterDigital. InterDigital is trading at a lower price-to-earnings ratio than Dolby Laboratories, indicating that it is currently the more affordable of the two stocks.

Summary

InterDigital beats Dolby Laboratories on 11 of the 17 factors compared between the two stocks.

Dolby Laboratories Company Profile

Dolby Laboratories, Inc. designs and manufactures audio and imaging products for the cinema, television, broadcast and entertainment industries. Its products for cinema include Digital Cinema Servers and Cinema Audio Products, and broadcast and other include Dolby Conference Phone and Other Products. It offers services to support theatrical and television production for cinema exhibition, broadcast and home entertainment, including equipment training and maintenance, mixing room alignment and equalization, as well as audio, color and light image calibration. Its technologies include Advanced Audio Coding and High Efficiency Advanced Audio Coding, Dolby AC-4, Dolby Atmos, Dolby Digital, Dolby Digital Plus, Dolby TrueHD, Dolby Vision, Dolby Voice and High Efficiency Video Coding. It distributes its products in over 80 countries. Its technologies are incorporated in offerings in various end markets, such as the broadcast, Personal Computer, mobile, consumer electronics and other markets.

InterDigital Company Profile

InterDigital, Inc. designs and develops technologies that enable and enhance wireless communications in the United States and internationally. It offers technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, and 4G wireless networks and mobile terminal devices; and other wireless technologies related to Wi-Fi, WLAN, WMAN, and WRAN. It also provides interoperability and scalability solutions through oneMPOWER platform; and common interface to multiple service providers. The company's patented technologies are used in various products, including mobile devices comprising cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment consisting of base stations; components, dongles, and modules for wireless devices; and Internet of Things devices and software platforms. As of December 31, 2017, it had a portfolio of approximately 19,000 patents and patent applications related to the fundamental technologies that enable wireless communications. InterDigital, Inc. was founded in 1972 and is headquartered in Wilmington, Delaware.

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