Rolls-Royce Holdings (RR) AI Stock Analysis

• Market Cap: $62.29B
• Dividend Yield: N/A
• Average Volume (3M): 35.37M
• Price to Earnings (P/E): 24.6
• Beta (1Y): 1.07
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: UK
• Employees: 41,400
• Sector: Industrials
• Sector Strength: 66
• Industry: Aerospace & Defense
• EPS (TTM): 0.30
• Shares Outstanding: 8,500,152,000
• 10 Day Avg. Volume: 48,161,209
• 30 Day Avg. Volume: 35,369,994
• PEG Ratio: 6.54
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.82
• Price to Cash Flow (P/CF): 20.40
• P/FCF Ratio: 22.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 747.11p
• Price Target Upside: 1.95% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

Rolls-Royce Holdings shows strong operational performance with notable revenue and profit growth. However, financial stability concerns due to negative equity and high debt levels weigh on the score. The technical analysis indicates strong momentum but warns of potential short-term pullbacks due to overbought conditions. Valuation is also a concern, with a high P/E ratio and no dividend yield to attract income investors.

Positive Factors

Financial Performance

The operating profit and free cash flow have exceeded expectations.

Shareholder Returns

A £1bn share buyback programme has been launched, demonstrating confidence in the outlook and a strong commitment to shareholder returns.

Negative Factors

Supply Chain Challenges

The supply chain environment is still said to be challenging.

Rolls-Royce Holdings Business Overview & Revenue Model

Company Description

Rolls-Royce Holdings plc is a prominent British multinational engineering company, primarily known for its high-performance power systems. The company operates in several sectors, including civil aerospace, defense, power systems, and new markets. Rolls-Royce is renowned for designing, manufacturing, and distributing power systems for aviation and other industries, with a strong emphasis on innovation and sustainability. Its core products include aircraft engines, naval propulsion systems, and power generation systems, all supported by a robust service network.

How the Company Makes Money

Rolls-Royce Holdings generates revenue through a diversified business model focused on the sale and maintenance of power systems across various industries. In the civil aerospace sector, the company earns from the sale of jet engines for commercial aircraft and long-term service agreements, which provide a steady stream of income through maintenance, repair, and overhaul services. The defense sector contributes by supplying engines and related services for military aircraft, naval vessels, and submarines. In the power systems segment, Rolls-Royce offers engines and power generation equipment for use in marine, industrial, and energy sectors. Additionally, the company is actively exploring new markets, including sustainable energy solutions and digital technologies, to drive future growth. Strategic partnerships and collaborations also play a significant role in expanding its market reach and technological capabilities.

Rolls-Royce Holdings Financial Statement Overview

Summary

Rolls-Royce Holdings exhibits strong revenue and profit growth with improved cash flow metrics, highlighting effective operational performance. Nonetheless, the company faces significant balance sheet challenges with negative equity and high debt levels, posing potential financial stability risks that need to be addressed.

Income Statement

Rolls-Royce Holdings has demonstrated strong revenue growth with a 14.7% increase in 2024 compared to 2023. The gross profit margin improved to 22.3% in 2024 from 22.0% in 2023, indicating effective cost management. The company's net profit margin also increased to 13.3% in 2024. However, the EBITDA margin slightly decreased from 22.7% in 2023 to 18.4% in 2024, which suggests a need to control operating expenses further.

Balance Sheet

The balance sheet shows a significant challenge with negative stockholders' equity at -$912 million. This indicates that liabilities exceed assets, which could be a concern for financial stability. The debt-to-equity ratio cannot be calculated due to negative equity, but the overall high level of debt relative to assets remains a concern. The equity ratio is also negative, suggesting potential financial instability.

Cash Flow

Rolls-Royce's free cash flow grew by 63.3% in 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio improved to 1.50, showing efficient conversion of income to cash. However, the high free cash flow to net income ratio suggests reliance on non-operating sources of cash flow, which may not be sustainable long-term.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
17.82B	18.91B	16.49B	13.52B	11.22B	11.82B
	Gross Profit
4.10B	4.22B	3.62B	2.76B	2.14B	-210.00M
	EBIT
2.31B	2.91B	1.94B	339.00M	513.00M	-2.08B
	EBITDA
2.63B	3.48B	3.74B	1.29B	996.00M	-166.00M
	Net Income Common Stockholders
2.33B	2.52B	2.41B	-1.19B	120.00M	-3.17B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.00B	5.36B	3.52B	2.40B	2.55B	3.42B
	Total Assets
31.86B	35.69B	31.51B	29.45B	28.67B	29.52B
	Total Debt
4.66B	5.13B	5.76B	5.96B	7.78B	7.33B
	Net Debt
-312.00M	-195.00M	2.25B	3.58B	5.24B	4.02B
	Total Liabilities
32.91B	36.57B	35.14B	35.47B	33.31B	34.39B
	Stockholders Equity
-1.07B	-912.00M	-3.68B	-6.05B	-4.66B	-4.90B
Cash Flow		Free Cash Flow
2.63B	2.90B	1.77B	1.49B	-587.00M	-3.59B
	Operating Cash Flow
3.02B	3.78B	2.48B	1.85B	-259.00M	-3.01B
	Investing Cash Flow
-753.00M	-831.00M	-726.00M	826.00M	-428.00M	-1.01B
	Financing Cash Flow
-765.00M	-1.05B	-549.00M	-2.87B	-88.00M	3.02B

Rolls-Royce Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 732.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RR, the sentiment is Positive. The current price of 732.8 is above the 20-day moving average (MA) of 683.86, above the 50-day MA of 626.43, and above the 200-day MA of 537.59, indicating a bullish trend. The MACD of 48.13 indicates Negative momentum. The RSI at 60.67 is Neutral, neither overbought nor oversold. The STOCH value of 81.80 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:RR.

Rolls-Royce Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SMIN	78 Outperform	£6.78B	27.67	10.84%	2.19%	3.13%	13.36%
RR	68 Neutral	$62.29B	24.56		―	―	―
Sector *	62 Neutral	$8.11B	13.34	1.17%	3.02%	4.16%	-15.14%