Rolls-Royce Holdings (GB:RR)
LSE:RR
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Rolls-Royce Holdings
(LSE:RR)
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Rating:76Outperform
Price Target:
1,349.00 p
▲(17.30% Upside)
Action:ReiteratedDate:03/01/26
The score is driven primarily by improving fundamentals (profitability and free cash flow rebound) and a constructive technical uptrend, reinforced by upbeat guidance and shareholder return commitments from the latest earnings call. The main constraint is balance-sheet leverage/recency of negative equity, with valuation appearing fair rather than clearly discounted and the dividend yield modest.
Positive Factors
Margin recovery and profitability
Rolls‑Royce's sharp margin expansion and return to sustained profitability reflect structural improvements: higher Civil Aerospace margins and operating leverage from services. Improved margins increase resilience to cyclical downturns and support reinvestment and sustained free cash flow generation.
Negative Factors
Elevated leverage and recent negative equity
Meaningful leverage and a recent history of negative equity limit financial flexibility and increase refinancing and covenant risk. Even with improving cash flow, debt relative to equity and modest cash coverage constrains aggressive investment or large M&A without further deleveraging.
Read all positive and negative factors
Positive Factors
Negative Factors
Margin recovery and profitability
Rolls‑Royce's sharp margin expansion and return to sustained profitability reflect structural improvements: higher Civil Aerospace margins and operating leverage from services. Improved margins increase resilience to cyclical downturns and support reinvestment and sustained free cash flow generation.
Read all positive factors
Rolls-Royce Holdings (RR) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£96.67B
Dividend Yield0.91%
Average Volume (3M)38.06M
Price to Earnings (P/E)16.6
Beta (1Y)1.19
Revenue Growth9.62%
EPS Growth146.74%
CountryUK
Employees42,400
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.16
Shares Outstanding8,406,374,000
10 Day Avg. Volume34,868,737
30 Day Avg. Volume38,062,595
Financial Highlights & Ratios
PEG Ratio0.13
Price to Book (P/B)35.50
Price to Sales (P/S)4.56
P/FCF Ratio25.71
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,394.32Price Target Upside21.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)0.36
Revenue Forecast (FY)£22.42B
Rolls-Royce Holdings Business Overview & Revenue Model
Company Description
Rolls-Royce Holdings plc operates as an industrial technology company in the United Kingdom and internationally. The company operates in four segments: Civil Aerospace, Power Systems, Defence, and New Markets. The Civil Aerospace segment develops,...
How the Company Makes Money
Rolls-Royce primarily earns revenue from (1) selling engines and power systems and (2) providing long-term aftermarket services that support those products throughout their operating lives. In Civil Aerospace, the company generates revenue from th...
Rolls-Royce Holdings Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The earnings call reflected significant improvements in financial performance, operational margins, and strategic initiatives. Despite facing supply chain constraints and specific challenges with Trent 1000 engines, the company raised its guidance for 2025 and is on track with strategic targets. The sentiment is optimistic due to strong execution of strategic initiatives, profitability improvements, and increased shareholder returns.Positive Updates
Strong Financial Performance
Operating profit of GBP 1.7 billion was 50% higher than last year. Group revenues grew by 13% to GBP 9.1 billion with good end market growth. Free cash flow was GBP 1.6 billion, 37% higher than last year.
Negative Updates
Supply Chain Constraints
Performance impacted by industry-wide supply chain constraints. Continued product cost inflation as a result of supply chain challenges.
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Q2-2025 Updates
Positive
Negative
Strong Financial Performance
Operating profit of GBP 1.7 billion was 50% higher than last year. Group revenues grew by 13% to GBP 9.1 billion with good end market growth. Free cash flow was GBP 1.6 billion, 37% higher than last year.
Read all positive updates
Company Guidance
In the recent call, the company provided updated guidance for 2025, highlighting strong financial performance and strategic progress. The underlying operating profit is now expected to reach between GBP 3.1 billion to GBP 3.2 billion, reflecting a significant improvement from the first half's GBP 1.7 billion. Free cash flow is projected to be GBP 3 billion to GBP 3.1 billion, driven by higher operating profit and continued LTSA balance growth. The operating margin for the first half was 19.1%, up 4.9 percentage points from last year, with Civil Aerospace's margin rising by 7.1 percentage points to 24.9%. The group aims to return GBP 1.9 billion to shareholders in 2025, demonstrating a commitment to rewarding shareholders amidst ongoing strategic investments.Rolls-Royce Holdings Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
48
Neutral
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 21.21B | 18.91B | 16.49B | 13.52B | 11.22B |
| Gross Profit | 5.92B | 4.22B | 3.62B | 2.69B | 2.14B |
| EBITDA | 6.14B | 3.48B | 3.74B | 1.25B | 996.00M |
| Net Income | 5.84B | 2.52B | 2.41B | -1.27B | 120.00M |
Balance Sheet | |||||
| Total Assets | 38.12B | 35.69B | 31.51B | 29.45B | 28.67B |
| Cash, Cash Equivalents and Short-Term Investments | 6.53B | 5.36B | 3.52B | 2.40B | 2.55B |
| Total Debt | 4.27B | 5.13B | 5.76B | 5.96B | 7.78B |
| Total Liabilities | 35.36B | 36.57B | 35.14B | 35.47B | 33.31B |
| Stockholders Equity | 2.73B | -912.00M | -3.68B | -6.05B | -4.66B |
Cash Flow | |||||
| Free Cash Flow | 3.76B | 2.90B | 1.77B | 1.25B | -818.00M |
| Operating Cash Flow | 4.38B | 3.78B | 2.48B | 1.85B | -259.00M |
| Investing Cash Flow | -905.00M | -831.00M | -726.00M | 826.00M | -428.00M |
| Financing Cash Flow | -2.83B | -1.05B | -549.00M | -2.87B | -88.00M |
Rolls-Royce Holdings Technical Analysis
Negative
1150.00
Price Trends
1262.12
Negative
1198.87
Negative
1128.35
Positive
Market Momentum
-26.44
Positive
43.01
Neutral
40.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RR, the sentiment is Negative. The current price of 1150 is below the 20-day moving average (MA) of 1261.80, below the 50-day MA of 1262.12, and above the 200-day MA of 1128.35, indicating a neutral trend. The MACD of -26.44 indicates Positive momentum. The RSI at 43.01 is Neutral, neither overbought nor oversold. The STOCH value of 40.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:RR.
Rolls-Royce Holdings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | £96.67B | 16.57 | 227.54% | 0.91% | 9.62% | 146.74% | |
69 Neutral | £61.00B | 24.91 | 17.90% | 1.99% | 11.60% | 8.03% | |
68 Neutral | £6.00B | 9.88 | 43.22% | 0.56% | 7.36% | 48.93% | |
64 Neutral | £7.14B | 15.58 | 13.46% | 1.93% | -6.93% | 18.57% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | £6.19B | 20.23 | 13.03% | 1.10% | -0.38% | ― |
* Industrials Sector Average
GB:RR
Rolls-Royce Holdings
1,150.00
362.87
46.10%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.