Dolby Laboratories (NYSE: DLB) and Function(x) (OTCMKTS:FNCX) are both cyclical consumer goods & services companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Profitability

This table compares Dolby Laboratories and Function(x)’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%
Function(x) N/A N/A N/A

Analyst Ratings

This is a summary of recent ratings and price targets for Dolby Laboratories and Function(x), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 1 2 0 2.67
Function(x) 0 0 0 0 N/A

Dolby Laboratories currently has a consensus target price of $60.17, indicating a potential downside of 1.35%. Given Dolby Laboratories’ higher probable upside, equities research analysts clearly believe Dolby Laboratories is more favorable than Function(x).

Dividends

Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Function(x) does not pay a dividend. Dolby Laboratories pays out 33.0% of its earnings in the form of a dividend. Dolby Laboratories has increased its dividend for 2 consecutive years.

Insider & Institutional Ownership

52.5% of Dolby Laboratories shares are held by institutional investors. Comparatively, 0.0% of Function(x) shares are held by institutional investors. 43.8% of Dolby Laboratories shares are held by company insiders. Comparatively, 60.5% of Function(x) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Dolby Laboratories and Function(x)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.08 billion 5.77 $201.80 million $1.94 31.44
Function(x) $4.51 million 0.50 -$61.86 million N/A N/A

Dolby Laboratories has higher revenue and earnings than Function(x).

Volatility & Risk

Dolby Laboratories has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Function(x) has a beta of -0.65, suggesting that its stock price is 165% less volatile than the S&P 500.

Summary

Dolby Laboratories beats Function(x) on 12 of the 14 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 Function(x)

Function(x) Inc., formerly DraftDay Fantasy Sports, Inc., is a diversified media and entertainment company. The Company conducts three lines of businesses, which are digital publishing through Wetpaint.com, Inc. (Wetpaint) and Rant, Inc. (Rant); fantasy sports gaming through DraftDay Gaming Group, Inc. (DDGG), and digital content distribution through Choose Digital, Inc. (Choose Digital). The Company’s segments include Wetpaint, which is a media channel reporting original news stories and publishing information content covering television shows, music, celebrities, entertainment news and fashion; Choose Digital, which is a business-to-business platform for delivering digital content; DDGG, which is a business-to-business operator of daily fantasy sports, and Other. The Company’s digital publishing business also includes Rant, which is a digital publisher that publishes original content in over 13 verticals, such as in sports, entertainment, pets, cars and food.

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