Dolby Laboratories (NYSE: DLB) and Twenty-First Century Fox (NASDAQ:FOX) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, analyst recommendations, institutional ownership, earnings, dividends and risk.

Earnings & Valuation

This table compares Dolby Laboratories and Twenty-First Century Fox’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.07 billion 5.58 $340.22 million $1.96 29.68
Twenty-First Century Fox $28.50 billion 1.72 $7.11 billion $1.59 16.62

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

Analyst Recommendations

This is a breakdown of current recommendations for Dolby Laboratories and Twenty-First Century Fox, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 2 3 0 2.60
Twenty-First Century Fox 0 1 1 0 2.50

Dolby Laboratories presently has a consensus price target of $56.88, suggesting a potential downside of 2.24%. Twenty-First Century Fox has a consensus price target of $34.00, suggesting a potential upside of 28.64%. Given Twenty-First Century Fox’s higher probable upside, analysts plainly believe Twenty-First Century Fox is more favorable than Dolby Laboratories.

Dividends

Dolby Laboratories pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Twenty-First Century Fox pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. Dolby Laboratories pays out 28.6% of its earnings in the form of a dividend. Twenty-First Century Fox pays out 22.6% 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 2 consecutive years. Twenty-First Century Fox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Dolby Laboratories has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500. Comparatively, Twenty-First Century Fox has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

51.9% of Dolby Laboratories shares are owned by institutional investors. Comparatively, 23.3% of Twenty-First Century Fox shares are owned by institutional investors. 43.8% of Dolby Laboratories shares are owned by insiders. Comparatively, 39.4% of Twenty-First Century Fox shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Dolby Laboratories and Twenty-First Century Fox’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dolby Laboratories 19.02% 10.25% 8.78%
Twenty-First Century Fox 10.36% 22.47% 7.20%

Summary

Dolby Laboratories beats Twenty-First Century Fox on 10 of the 17 factors compared between the two stocks.

About Dolby Laboratories

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.

About Twenty-First Century Fox

Twenty-First Century Fox, Inc. is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Cable Network Programming segment produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution. The Television segment is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Filmed Entertainment segment is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world. The Other, Corporate and Eliminations segment consists primarily of corporate overhead and eliminations, and other businesses.

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