Is Dolby Laboratories, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Dolby Laboratories, Inc. has moved from fair to attractive, indicating a more favorable assessment of its stock. The company appears to be undervalued, particularly when considering its P/E ratio of 27, which is lower than the peer average of approximately 25.9 for similar companies like Qualys, Inc. and 104.9 for Duolingo, Inc. Additionally, Dolby's EV to EBITDA stands at 17.08, which is also competitive compared to its peers.
In terms of return performance, Dolby has underperformed relative to the S&P 500 across multiple periods, with a year-to-date return of -7.68% compared to the S&P 500's 12.22%. This trend continues over one year and three years, where Dolby has returned -0.80% and -1.02%, respectively, while the S&P 500 has delivered 17.14% and 70.41%. Despite this underperformance, the attractive valuation metrics suggest that Dolby Laboratories, Inc. may present a buying opportunity for investors looking for value in the software products sector.