DTS Inc. (
continues to impress with its innovative product pipeline,
increasing online availability, new customer wins and
partnerships. Although shares of this Zacks Rank #2 (Buy) stock
plunged 6.4% ($1.36) to close at $19.76 on May 31, 2013, it
represents 28.73% return over the last six months.
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DTS posted better-than-expected first quarter of 2013 results
with non-GAAP earnings (including stock-based compensation) of 7
cents, much better than the Zacks Consensus Estimate of a loss of
7 cents per share. Although revenues missed the Zacks Consensus
Estimate, it jumped 21.7% from the year-ago quarter to $32.7
Lately, the primary driving factor behind DTS' strong performance
has been strategic partnerships with the likes of
, Samsung, Pantech, Yulong, Lenovo, Panasonic, Fujitsu, Haier,
LG, Changhong, Hisense, TCL, Konka, Skyworth and Huawei.
The partnerships with these consumer electronics manufacturers
have not only expanded DTS's penetration in the Asian markets but
also boosted revenue growth over the last few quarters.
Most recently, DTS and Chinese automaker BYD Auto entered into a
partnership, under which four BYD models, scheduled to be
released in the second quarter of this year, will integrate DTS
We believe that this partnership will expand DTS' reach in the
Chinese automotive industry. Moreover, the current deal will also
help DTS to reap the benefits from the growing demand for
environment-friendly, green technology-run automobiles.
Notably, in the first quarter, DTS reported a modest rise in
automotive revenues, which represented approximately 10% of total
revenue. DTS believes that the primary growth driver for 2013
will be the network connected business (TV and mobile devices),
which will offset sluggish growth from the Blu-Ray market.
We believe that DTS will continue to gain from accelerated
expansion of its technology into new markets, such as
smartphones, portable devices, digital media players and
network-connected TV space.
This coupled with higher penetration in the Chinese smartphone
and automotive markets and incremental revenues from the
acquisition of SRS labs will drive top-line growth over the long
However, the ongoing volatility in the macroeconomic environment
and sluggish consumer spending coupled with significant
Dolby Laboratories (
Sony Corp. (
are the major headwinds.
Currently, DTS has a Zacks Rank #2 (Buy).