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

Risk and Volatility

Dolby Laboratories has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, FunctionX has a beta of -0.62, meaning that its share price is 162% less volatile than the S&P 500.

Institutional and Insider Ownership

51.9% of Dolby Laboratories shares are owned by institutional investors. Comparatively, 1.6% of FunctionX shares are owned by institutional investors. 43.8% of Dolby Laboratories shares are owned by company insiders. Comparatively, 66.9% of FunctionX shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Dolby Laboratories and FunctionX’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dolby Laboratories $1.07 billion 5.51 $340.22 million $1.96 29.30
FunctionX $3.13 million 0.09 -$10.43 million N/A N/A

Dolby Laboratories has higher revenue and earnings than FunctionX.

Profitability

This table compares Dolby Laboratories and FunctionX’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%
FunctionX -228.07% N/A -34.26%

Analyst Ratings

This is a breakdown of current recommendations for Dolby Laboratories and FunctionX, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dolby Laboratories 0 1 3 0 2.75
FunctionX 0 0 0 0 N/A

Dolby Laboratories presently has a consensus price target of $58.83, suggesting a potential upside of 2.46%. Given Dolby Laboratories’ higher possible upside, research analysts plainly believe Dolby Laboratories is more favorable than FunctionX.

Dividends

Dolby Laboratories pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. FunctionX does not pay a dividend. Dolby Laboratories pays out 28.6% of its earnings in the form of a dividend. FunctionX has increased its dividend for 2 consecutive years.

Summary

Dolby Laboratories beats FunctionX on 11 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 FunctionX

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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