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The Walt Disney Co DIS

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

U.S. Corporate Tax Rate Unlikely to Change After Roadblocks Rise in Senate

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Given recent political developments around the Build Back Better bill, we are reversing our forecast that the U.S. corporate tax rate will rise to 26% in 2022. We now believe the U.S. statutory tax rate will remain at 21% at least through President Joe Biden’s remaining term, which ends in early 2025. Our equity analysts will incorporate this new U.S. corporate tax rate assumption into their valuation models in the coming weeks. We previously simulated the impact of various tax rate changes on covered U.S. equities; reversing the statutory tax rate assumption to 21% results in a 3% average valuation increase, all else being equal.

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Company Profile

Business Description

Walt Disney owns the rights to some of the most globally recognized characters, from Mickey Mouse to Luke Skywalker. These characters and others are featured in several Disney theme parks around the world. Disney makes live-action and animated films under studios such as Pixar, Marvel, and Lucasfilm and also operates media networks including ESPN and several TV production studios. Disney recently reorganized into four segments with one new segment: direct-to-consumer and international. The new segment includes the two announced OTT offerings, ESPN+ and the Disney SVOD service. The plan also combines two segments, parks and resorts and consumer products, into one. The media networks group contains the U.S. cable channels and ABC. The studio segment holds the movie production assets.

Contact
500 South Buena Vista Street
Burbank, CA, 91521
T +1 818 560-1000
Sector Communication Services
Industry Entertainment
Most Recent Earnings Sep 30, 2021
Fiscal Year End Oct 2, 2022
Stock Type Slow Growth
Employees 190,000

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