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Western Asset Global High Fd Intrinsic Value: DCF (FCF Based)

: $10.21 (As of Today)
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As of today (2022-06-24), Western Asset Global High Fd's intrinsic value calculated from the Discounted Cash Flow model is $10.21.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Western Asset Global High Fd's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Western Asset Global High Fd is 29.68%.

The industry rank for Western Asset Global High Fd's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:


Western Asset Global High Fd Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Western Asset Global High Fd's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Western Asset Global High Fd Annual Data
Trend May18 May19 May20 May21
Intrinsic Value: DCF (FCF Based)
- - - -

Western Asset Global High Fd Semi-Annual Data
Nov17 May18 Nov18 May19 Nov19 May20 Nov20 May21 Nov21
Intrinsic Value: DCF (FCF Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only - - - - -

Western Asset Global High Fd Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Free Cash Flow Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $0.818.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Western Asset Global High Fd's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=0.818*12.485
=10.21

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(10.21-7.18)/10.21
=29.68 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Western Asset Global High Fd  (NYSE:EHI) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


Western Asset Global High Fd Intrinsic Value: DCF (FCF Based) Related Terms

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Western Asset Global High Fd Business Description

Western Asset Global High Fd logo
Industry
Financial Services » Asset Management NAICS : 523930 SIC : 6282
Traded in Other Exchanges
N/A
Address
620 Eighth Avenue, 49th Floor, New York, NY, USA, 10018
Western Asset Global High Inc Fd Inc is a non-diversified, closed-end management investment company. Its investment objective is high current income and total return by investing in a global portfolio of securities. The fund invests in various sectors such as Consumer Discretionary, Energy, Healthcare, Industrials, materials, and others.
Executives
Fergerson Laura F other: Manager/Investment Manager 3310 QUALITY DRIVE 2ND FLOOR RANCHO CORDOVA CA 95670
Eakes Brian other: Manager/Investment Manager 100 INTERNATIONAL DRIVE BALTIMORE MD 21202
Hoyt George P. officer: Secretary and Ch Lgl Officer C/O FRANKLIN TEMPLETON 100 FIRST STAMFORD PLACE STAMFORD CT 06902
Nicholls Matthew other: Director of Sub-Adviser ONE FRANKLIN PARKWAY SAN MATEO CA 94403
Bolt Jennifer J other: Director of Sub-Adviser C/O FRANKLIN RESOURCES, INC. ONE FRANKLIN PARKWAY SAN MATEO CA 94403-1906
Plafker Jed A. other: Director of Sub-Adviser ONE FRANKLIN PARKWAY SAN MATEO CA 94403
Saba Capital Management, L.p. 10 percent owner 405 LEXINGTON AVENUE 58TH FLOOR NEW YORK NY 10174
Weinstein Boaz 10 percent owner 405 LEXINGTON AVENUE 58TH FLOOR NEW YORK NY 10174
Jensen Fred Steven officer: Chief Compliance Officer LEGG MASON 620 EIGHTH AVENUE, 49TH FLOOR NEW YORK NY 10018
Cronin Daniel P director 235 EAST 42ND ST NEW YORK NY 10017
Hutchinson William R director 535 N MICHIGAN STE 1012 CHICAGO IL 60611
Berarducci Christopher officer: Treas/Principal Finan Officer LEGG MASON 620 EIGHTH AVENUE NEW YORK NY 10018
Kumar Nisha director 1735 MARKET STREET 32ND FLOOR PHILADELPHIA PA 19103
Berg Jennifer S officer: Treasurer 100 INTERNATIONAL DRIVE 7TH FLOOR BALTIMORE MD 21202
Kuehl Todd F officer: Chief Compliance Officer 1555 PEACHTREE STREET NE ATLANTA 2Q 30309

Western Asset Global High Fd Headlines

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