Is DLB a high-quality business?

AlphaMadera's AlphaQuality grade scores Dolby Laboratories, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how DLB compares to a Buffett-style quality bar.

What is Dolby Laboratories, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to DLB based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes DLB a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

DLB - Dolby Laboratories, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $90.33 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Stable Earnings Power

AlphaQuality — archetype-weighted quantitative grade

B- 67.1 / 100 composite

Composite Grade

Composite of six pillars weighted for stable earnings power businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 20%

C- 44.1

5yr Avg ROIC 9.0% 55/100
Operating Margin Trend -1.05 pp/yr 19/100

Capital Efficiency

Weight: 15%

B- 66.5

5yr Avg ROE 9.2% 56/100
5yr Share-Count CAGR -1.8% 86/100

Growth Quality

Weight: 15%

D- 30.7

5yr Revenue CAGR 1.3% 31/100
5yr EPS CAGR -3.1% 14/100
Revenue-Growth Years (5) 3/5 60/100

Cash Generation

Weight: 15%

A+ 94.5

5yr FCF Margin 26.5% 96/100
5yr FCF/NI Conversion 1.44x 92/100

Balance Sheet

Weight: 20%

A+ 100.0

Net Debt / EBITDA -1.75x 100/100
Interest Coverage (EBIT/Int) 30.00x 100/100
Altman Z-Score 7.16 100/100

Stability

Weight: 15%

B- 63.6

EPS Volatility (σ/μ) 0.25 64/100
Piotroski F-Score 6 67/100
Negative-Revenue Years (5) 2/5 60/100

2 of 4 gurus held; 2 trimmed; 2 full exits.

Holders: 2 -2
Avg Δ position: -12.0%
New buys: 0
Full exits: 2

Dalio sold -100%
Wood sold -100%
Greenblatt decreased -21%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (20%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (15%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.