- Dolby is a high-margin business with a wide moat. The company generates its profits by licensing its proprietary audio and video technologies.
- It is hard to imagine that there are people who have never heard of the company or used its products - intentionally or unintentionally.
- The company experienced a few years of sluggishness, but has returned to moderate growth. The pandemic has not significantly affected Dolby, in part due to its debt-free balance sheet.
- However, from a stock-based compensation perspective, executive compensation appears to be disproportionate to operating profitability.
- The stock is not cheap even after the recent decline in share price and is likely to suffer further in the event of a recession. I keep this underfollowed company on my watch list.
For further details see:
Dolby Laboratories: Executive Compensation Not In Line With Operational Performance