Dolby Laboratories (NYSE: DLB) and Eros International (NYSE:EROS) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Dolby Laboratories and Eros International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 1 2 0 2.67
Eros International 0 0 2 0 3.00

Dolby Laboratories currently has a consensus target price of $60.17, suggesting a potential downside of 5.28%. Eros International has a consensus target price of $17.00, suggesting a potential upside of 71.72%. Given Eros International’s stronger consensus rating and higher probable upside, analysts clearly believe Eros International is more favorable than Dolby Laboratories.

Earnings and Valuation

This table compares Dolby Laboratories and Eros International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.08 billion 6.01 $201.80 million $1.94 32.74
Eros International $252.99 million 2.02 $3.80 million N/A N/A

Dolby Laboratories has higher revenue and earnings than Eros International.

Profitability

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

Net Margins Return on Equity Return on Assets
Dolby Laboratories 18.66% 10.62% 9.07%
Eros International 0.96% 0.22% 0.15%

Dividends

Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Eros International does not pay a dividend. Dolby Laboratories pays out 33.0% of its earnings in the form of a dividend. Eros International has increased its dividend for 3 consecutive years.

Risk & Volatility

Dolby Laboratories has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Eros International has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Institutional and Insider Ownership

52.5% of Dolby Laboratories shares are held by institutional investors. Comparatively, 60.5% of Eros International shares are held by institutional investors. 43.7% of Dolby Laboratories shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Dolby Laboratories beats Eros International on 9 of the 15 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 Eros International

Eros International Plc (Eros) is a holding company, which serves the Indian film entertainment industry. The Company’s principal activities include the acquisition, co-production and distribution of Indian films and related content. It distributes its film content through the distribution channels, such as theatrical, including multiplex chains and standalone theaters; television syndication, including satellite television broadcasting, cable television and terrestrial television; digital and ancillary, including music, inflight entertainment, home video, Internet protocol television (IPTV), video on demand (VOD), and Internet channels and Eros Now. As of March 31, 2016, its distribution network extends to over 50 countries, such as the United States, the United Kingdom, the Middle East, Germany, Poland, Russia, Romania, Indonesia and Arabic speaking countries. It conducts global operations through its Indian and international subsidiaries, including Eros International Media Limited.

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