Western Asset High Yield Defined Opportunity Fund Inc. (HYI): fair value, margin of safety and Wheel Score

Is HYI undervalued?

At 9.68 (close of 16 Oct 2026), HYI trades 68% below the GLS average fair value of 29.93. That average comes from 7 models run on the latest filings, and 6 of them land above the current price. Margins of safety over 30% are the exception rather than the rule across the ~7,400 stocks we value each night, so the number earns Western Asset High Yield Defined Opportunity Fund Inc. the full Value points in the Wheel Score - and a closer look at what the market is pricing in.

The 7 models disagree widely: DCF gives 3.56 while GLS Growth gives 68.17. A spread that wide means the average is sensitive to which methods you trust; the model table below shows where each one lands, and the Quote page lets you switch any of them off.

The nightly engine files HYI under Speculative / Distressed - negative earnings or a Piotroski score of 3 or less - which caps its Wheel Score at 45 and keeps it out of the Sunday Scan.

Nine valuation models for HYI

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

Financial health is weak: HYI passes 0 of the nine Piotroski tests. Our screens drop the stock at the health rule; a low score is often the reason a stock looks cheap on the valuation models. The GLS Moat score is low at 2.9 out of 10, which says the ten-year record of revenue, earnings, margins and returns on capital has been inconsistent - growth and shocks rather than steady compounding.

Returns on capital are moderate - ROIC 9.6%, ROE 9.6%, ROA 9.4% - with debt at 0.00 times equity and negative free cash flow.

The dividend yield is high at 11.78% (payout ratio 0%). A yield this size is often the market's way of pricing a risk to the payout, so the health score and cash flow matter more than usual.

Institutional ownership scores 3/10, insider activity 5/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 35: No options

HYI has no listed options in the nightly snapshot, so there is nothing to sell and the stock cannot be wheeled however good the business; the Wheel Score is capped at 39 and shown as "No options" (35 here). The valuation and quality numbers still apply to owning the shares outright.

Volume runs at 42k shares a day on a market cap of $125M, with a beta of 0.47 - a low beta, so day-to-day moves are smaller than the market's; the Stability part of the Wheel Score gives that 6 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

No upcoming earnings date is recorded for HYI in the nightly calendar. The shares go ex-dividend on 23 Oct 2026 (0.0950 per share), so a covered call sold before then carries a small early-assignment risk around that date.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

Similar stocks in Asset Management

The 12 companies below are the closest to Western Asset High Yield Defined Opportunity Fund Inc. by market cap within the Asset Management industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.

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