Dolby Laboratories Readies for Q4 Earnings Report Amid Market Challenges
Dolby Laboratories Inc (DLB) is set to announce its fourth-quarter fiscal 2024 results on Nov. 19.
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The Zacks Consensus Estimate for fiscal Q4 revenues stands at $305.8 million, reflecting a 5.3% increase from the $290.6 million reported in the same quarter last year. Dolby anticipates revenues between $300 million and $320 million.
In terms of earnings, Dolby expects non-GAAP EPS to fall between 61 cents and 76 cents. The consensus estimate for earnings is set at 68 cents per share, presenting a year-over-year rise of 4.6%.
Notably, Dolby has surpassed the Zacks Consensus Estimate in each of the last four quarters, achieving an average earnings surprise of 16.8%.
What to Watch for in DLB’s Q4 Results
Positive trends in Dolby Atmos, imaging patents, and Dolby Vision are likely to support fourth-quarter revenue growth.
Conversely, weak device shipments and underwhelming box office returns continue to pose challenges to licensing and products and services revenues. For Q4, Dolby projects Licensing revenues to range between $275 million and $295 million.
Our estimate for Licensing revenues stands at $282.2 million, a 6.4% increase year-over-year.
Examining Dolby Laboratories’ Price and EPS Impressions
Dolby Laboratories price-eps-surprise | Dolby Laboratories Quote
Due to a challenging market, decreased unit shipments, and lackluster cinema revenues, management now forecasts full-year revenues between $1.27 billion and $1.29 billion. This outlook marks a slowdown compared to its previous expectations for “roughly flat” growth this year.
We estimate full-year revenues will reach $1.274 billion, a 2% decline from the previous year.
Moreover, for fiscal 2024, Dolby projects a GAAP operating margin of 20%, while the non-GAAP operating margin is expected to be around 31%. GAAP operating expenses are anticipated to fall between $875 million and $885 million, whereas non-GAAP operating expenses are estimated between $735 million and $745 million.
Dolby anticipates non-GAAP EPS in the range of $3.60 to $3.75. Our estimate for the bottom line is set at $3.66, reflecting a 2.9% increase year-over-year.
Our Forecast for DLB
Currently, our model indicates that an earnings beat for DLB may not occur this quarter. A combination of a positive Earnings ESP along with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) tends to enhance the likelihood of an earnings surprise; however, that is not applicable in this instance.
DLB holds an Earnings ESP of -1.47% and is rated Zacks Rank #3 at the moment. To explore high-potential stocks, you might find our Earnings ESP Filter useful.
Potential Stocks to Consider
Here are three alternative stocks that our model suggests may exceed earnings expectations in this reporting cycle:
GDS Holdings Limited (GDS) currently features an Earnings ESP of +4.76% and a Zacks Rank #2. It is set to report quarterly earnings on Nov. 19, with consensus estimates predicting a loss of 21 cents and revenues of $415.4 million. GDS shares have surged by 86.6% over the past year.
Walmart Inc. (WMT) has an Earnings ESP of +1.44% and a Zacks Rank #3. WMT also reports its quarterly figures on Nov. 19, with consensus estimates for earnings at 53 cents per share and revenues at $167.5 billion. Walmart’s stock has gained 62.7% in the last year.
NVIDIA Corporation (NVDA) shows an Earnings ESP of +1.70% and a Zacks Rank #1. Scheduled to report on Nov. 20, NVDA’s consensus estimates for the upcoming quarter are earnings of 74 cents per share and revenues of $32.95 billion. Over the past year, NVIDIA shares have climbed by 181.7%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
