Comparing Dolby Laboratories (NYSE:DLB) and Palo Alto Networks (NASDAQ:PANW)

Dolby Laboratories (NYSE:DLB) and Palo Alto Networks (NASDAQ:PANW) are both technology companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.

Analyst Recommendations

This is a summary of current ratings and target prices for Dolby Laboratories and Palo Alto Networks, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dolby Laboratories	1	1	2	0	2.25
Palo Alto Networks	0	11	38	1	2.80

Dolby Laboratories currently has a consensus price target of $87.50, suggesting a potential upside of 45.84%. Palo Alto Networks has a consensus price target of $393.02, suggesting a potential upside of 14.92%. Given Dolby Laboratories’ higher possible upside, analysts plainly believe Dolby Laboratories is more favorable than Palo Alto Networks.

Risk & Volatility

Dolby Laboratories has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Palo Alto Networks has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Profitability

This table compares Dolby Laboratories and Palo Alto Networks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dolby Laboratories	16.70%	11.08%	9.04%
Palo Alto Networks	2.67%	8.50%	4.35%

Institutional & Insider Ownership

58.6% of Dolby Laboratories shares are owned by institutional investors. Comparatively, 79.8% of Palo Alto Networks shares are owned by institutional investors. 37.9% of Dolby Laboratories shares are owned by company insiders. Comparatively, 1.4% of Palo Alto Networks shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Dolby Laboratories and Palo Alto Networks”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dolby Laboratories	$1.35 billion	4.15	$255.02 million	$2.35	25.53
Palo Alto Networks	$11.48 billion	24.37	$307.00 million	$0.51	670.59

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

Summary

Palo Alto Networks beats Dolby Laboratories on 9 of the 15 factors compared between the two stocks.

About Dolby Laboratories

Dolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment at the cinema, DTV transmissions and devices, mobile devices, OTT video and music services, home entertainment devices, and automobiles. The company develops and licenses its audio technologies, such as AAC & HE-AAC, a digital audio codec solution used for a range of media applications; AVC, a digital video codec with high bandwidth efficiency used in various media devices; Dolby AC-4, a digital audio coding technology that delivers new audio experiences to a range of playback devices; and Dolby Atmos technology for cinema and various media devices. Its audio technologies also include DD, a digital audio coding technology that provides multichannel sound to applications; DD+, a digital audio coding technology that offers audio transmission for a range of media applications and devices; Dolby TrueHD, a digital audio coding technology providing encoding for media application; Dolby Vision, an imaging technology for cinema and media devices; and HEVC, a digital video codec with high bandwidth efficiency for media devices. In addition, the company offers digital cinema servers, cinema processors, amplifiers, loudspeakers, and audio and imaging hardware and software products for the cinema, television, broadcast, communication, and entertainment industries. Further, it provides 3-D glasses and kits; and various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment. The company serves film studios, content creators, post-production facilities, cinema operators, broadcasters, and video game designers. It sells its products directly to the end users, as well as through dealers and distributors worldwide. Dolby Laboratories, Inc. was founded in 1965 and is headquartered in San Francisco, California.

About Palo Alto Networks

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security operations, and threat intelligence and security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. Palo Alto Networks, Inc. was incorporated in 2005 and is headquartered in Santa Clara, California.