Financial Contrast: Dolby Laboratories (DLB) vs. Quarterhill (QTRH)

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

Risk and Volatility

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Dolby Laboratories has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Quarterhill has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Dolby Laboratories and Quarterhill, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 3 1 0 2.25
Quarterhill 0 0 1 0 3.00

Dolby Laboratories presently has a consensus target price of $62.00, indicating a potential downside of 8.65%. Given Dolby Laboratories’ higher possible upside, research analysts clearly believe Dolby Laboratories is more favorable than Quarterhill.

Earnings and Valuation

This table compares Dolby Laboratories and Quarterhill’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.08 billion 6.50 $201.80 million $2.20 30.85
Quarterhill $134.71 million 1.35 $10.22 million $0.52 2.94

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

Profitability

This table compares Dolby Laboratories and Quarterhill’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%
Quarterhill 7.59% 20.84% 17.43%

Dividends

Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 0.9%. Quarterhill pays an annual dividend of $0.04 per share and has a dividend yield of 2.6%. Dolby Laboratories pays out 29.1% of its earnings in the form of a dividend. Quarterhill pays out 7.7% 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. Quarterhill is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

53.3% of Dolby Laboratories shares are owned by institutional investors. Comparatively, 13.1% of Quarterhill shares are owned by institutional investors. 43.7% of Dolby Laboratories shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Dolby Laboratories beats Quarterhill on 10 of the 16 factors compared between the two stocks.

About Dolby Laboratories

Dolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment and communications at the cinema, at home, at work, and on mobile devices. The company develops and licenses its audio technologies, including Dolby Digital Plus for digital television, mobile, and Internet-based services; Dolby Digital, a digital audio coding technology that provides multichannel sound in the home; and AAC & HE-AAC, an audio coding technologies used to broadcast, download, and streaming content. Its audio technologies also comprise Dolby TrueHD, an audio coding technology for content providers; Dolby Atmos, an object-oriented audio technology for home theaters, device speakers, and headphones; Dolby AC-4, a digital audio coding system that addresses the current and future needs of broadcast and streaming entertainment services; Dolby Voice, an audio conferencing technology; and Dolby Vision, an imaging technology for cinema, digital television, and other consumer devices, as well as HEVC, a digital video codec with higher bandwidth efficiency used in a range of media devices. In addition, the company designs and manufactures audio and imaging products, such as digital cinema servers, Dolby Cinema audio products, and other products for the film production, cinema, television, broadcast, and entertainment industries. Further, it offers an array of services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment. The company serves film studios, content creators, post-production facilities, cinema operators, broadcasters, and video game designers. It sells its products directly to the end users, as well as through dealers and distributors worldwide. Dolby Laboratories, Inc. was founded in 1965 and is headquartered in San Francisco, California.

About Quarterhill

Quarterhill Inc. focuses on acquisition and management of technology companies that provides products and services worldwide. Its Technology segment licenses patent technologies to approximately 355 companies. Its patent portfolios include patents relating to 3D television, phased loop semiconductor, semiconductor manufacturing and packaging, medical stent, intelligent personal assistant, streaming video, semiconductor clocking, LED lighting, smart meter monitoring, non-volatile flash memory and other memory, building automation, enhanced image processing, computer gaming, and various other technologies; automotive headlight assemblies, microcontrollers applicable to safety-critical aerospace, and CMOS image sensors; and medical, industrial, and automotive applications. Its Mobility segment provides automated truck weigh stations; toll road systems and equipment; traffic management and safety systems; VectorSense, a tire sensor suite; Vehicle Information-In-Motion, a traffic intelligence system; integrated traffic control systems; permanent and portable slow speed weigh-in-motion systems; portable wheel load scales; traffic data collection products; vehicle and axle detection equipment; and automated vehicle identification, and other hardware and software products. It serves intelligent transportation systems industry through salespeople, distributors, agents, other contractors, and systems integrators, as well as directly. Its Factory segment creates and licenses enterprise asset management (EAM) software solutions to asset intensive industries through its salesforce, as well as Internet. It offers WorkAlign, a product suite, which consists of integrated products, such as scheduler, IIoT, mobile for EAM, maintenance budgeting, warranty tracker, and analytics; and consulting services. The company was formerly known as Wi-LAN Inc. and changed its name to Quarterhill Inc. in June 2017. Quarterhill Inc. was incorporated in 1992 and is headquartered in Ottawa, Canada.

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