Contrasting RPX (RPXC) & Dolby Laboratories (DLB)

RPX (NASDAQ: RPXC) and Dolby Laboratories (NYSE:DLB) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares RPX and Dolby Laboratories’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RPX -27.00% 5.04% 3.62%
Dolby Laboratories 7.64% 12.73% 10.65%

Insider & Institutional Ownership

88.8% of RPX shares are held by institutional investors. Comparatively, 53.7% of Dolby Laboratories shares are held by institutional investors. 3.5% of RPX shares are held by company insiders. Comparatively, 43.7% of Dolby Laboratories shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

RPX has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Dolby Laboratories has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for RPX and Dolby Laboratories, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RPX 1 0 1 0 2.00
Dolby Laboratories 0 3 2 0 2.40

RPX currently has a consensus target price of $14.50, suggesting a potential upside of 38.76%. Dolby Laboratories has a consensus target price of $65.20, suggesting a potential upside of 6.12%. Given RPX’s higher possible upside, equities analysts plainly believe RPX is more favorable than Dolby Laboratories.

Earnings & Valuation

This table compares RPX and Dolby Laboratories’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RPX $330.46 million 1.58 -$79.14 million N/A N/A
Dolby Laboratories $1.08 billion 5.91 $201.80 million $2.20 27.93

Dolby Laboratories has higher revenue and earnings than RPX.

Dividends

RPX pays an annual dividend of $0.10 per share and has a dividend yield of 1.0%. Dolby Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Dolby Laboratories pays out 29.1% of its earnings in the form of a dividend. Dolby Laboratories has raised its dividend for 3 consecutive years. Dolby Laboratories is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Dolby Laboratories beats RPX on 12 of the 16 factors compared between the two stocks.

About RPX

RPX Corporation provides patent risk management and discovery services in the United States, Japan, South Korea, and internationally. It offers a subscription-based patent risk management service that facilitates exchanges of value between owners and users of patents. The company also provides a defensive patent aggregation in which it acquires patent assets to offer clients with sub-licenses; and underwrites patent infringement liability insurance policies to insure against certain costs of litigation. In addition, it offers its clients with access to its proprietary patent market intelligence and data. Further, the company provides a range of technology-enabled services, including data collection and forensics, data processing and analytics, data hosting, project management, data production, and document review services to streamline the administration of litigation matters, internal and external investigations, regulatory compliance, and other matters. Its clients include companies that design, make, or sell technology-based products and services, as well as companies that use technology in their businesses; and corporations and law firms. RPX Corporation was founded in 2008 and is headquartered in San Francisco, California.

About Dolby Laboratories

Dolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment and communications at the cinema, at home, at work, and on mobile devices. The company develops and licenses its audio technologies, including Dolby Digital Plus for digital television, mobile, and Internet-based services; Dolby Digital, a digital audio coding technology that provides multichannel sound in the home; and AAC & HE-AAC, an audio coding technologies used to broadcast, download, and streaming content. Its audio technologies also comprise Dolby TrueHD, an audio coding technology for content providers; Dolby Atmos, an object-oriented audio technology for home theaters, device speakers, and headphones; Dolby AC-4, a digital audio coding system that addresses the current and future needs of broadcast and streaming entertainment services; Dolby Voice, an audio conferencing technology; and Dolby Vision, an imaging technology for cinema, digital television, and other consumer devices, as well as HEVC, a digital video codec with higher bandwidth efficiency used in a range of media devices. In addition, the company designs and manufactures audio and imaging products, such as digital cinema servers, Dolby Cinema audio products, and other products for the film production, cinema, television, broadcast, and entertainment industries. Further, it offers an array of 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.

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