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Rolls-Royce Holdings (GB:RR)
LSE:RR

Rolls-Royce Holdings (RR) AI Stock Analysis

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GB

Rolls-Royce Holdings

(LSE:RR)

Rating:66Neutral
Price Target:
963.00p
▲(8.76%Upside)
Rolls-Royce Holdings' overall score reflects strong financial performance in terms of revenue and cash flow growth, but is weighed down by balance sheet concerns and high valuation. Technical indicators show bullish momentum, although the stock appears overbought.
Positive Factors
Financial Performance
Operating profit and free cash flow have exceeded expectations.
Market Position
Rolls-Royce could be an obvious beneficiary if Airbus considers derisking its engine reliance on the US, being a European-based engine OEM already supplying to Airbus' widebody programmes.
Shareholder Confidence
A £1bn share buyback programme has been launched, demonstrating confidence in the outlook and a strong commitment to shareholder returns.
Negative Factors
Tariffs Impact
The bigger risk from tariffs is to engine flying hours from potentially weakening air traffic demand, which could have an almost immediate impact on cash generation.

Rolls-Royce Holdings (RR) vs. iShares MSCI United Kingdom ETF (EWC)

Rolls-Royce Holdings Business Overview & Revenue Model

Company DescriptionRolls-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, manufactures, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services. The Power Systems segment engages in the development, manufacture, marketing, and sale of integrated solutions for onsite power and propulsion for the marine, defense, power generation, and industrial markets. The Defence segment offers aero engines for military transport and patrol aircraft applications; and naval engines and submarine nuclear power plants, as well as aftermarket services. The New Markets segment develops, manufactures, and sells small modular reactor and new electrical power solutions. It also provides maintenance, repair, and overhaul services. Rolls-Royce Holdings plc was founded in 1884 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyRolls-Royce Holdings generates revenue through the sale of aircraft engines and power systems, as well as through long-term service agreements. The Civil Aerospace sector is the primary revenue driver, with significant income from the sale of commercial jet engines and associated services. The company offers maintenance, repair, and overhaul services through its TotalCare and CorporateCare programs, which provide stable, recurring revenue streams. In the Defense sector, Rolls-Royce earns money by supplying engines and services for military aircraft, naval vessels, and land-based defense vehicles. The Power Systems segment contributes to revenue by providing engines and systems for marine, energy, and industrial applications. Strategic partnerships with major airlines, defense contractors, and governments worldwide also enhance the company's earnings potential.

Rolls-Royce Holdings Financial Statement Overview

Summary
Rolls-Royce Holdings shows strong revenue and profit growth with a significant increase in cash flow, indicating solid operational performance. However, the balance sheet reveals negative equity and high debt levels, suggesting financial stability risks.
Income Statement
85
Very Positive
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
45
Neutral
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
78
Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
17.82B18.91B16.49B13.52B11.22B11.82B
Gross Profit
4.10B4.22B3.62B2.76B2.14B-210.00M
EBIT
2.31B2.91B1.94B339.00M513.00M-2.08B
EBITDA
2.63B3.48B3.74B1.29B996.00M-166.00M
Net Income Common Stockholders
2.33B2.52B2.41B-1.19B120.00M-3.17B
Balance SheetCash, Cash Equivalents and Short-Term Investments
4.34B5.36B3.52B2.40B2.55B3.42B
Total Assets
33.01B35.69B31.51B29.45B28.67B29.52B
Total Debt
4.99B5.13B5.76B5.96B7.78B7.33B
Net Debt
669.00M-195.00M2.25B3.58B5.24B4.02B
Total Liabilities
35.25B36.57B35.14B35.47B33.31B34.39B
Stockholders Equity
-2.29B-912.00M-3.68B-6.05B-4.66B-4.90B
Cash FlowFree Cash Flow
2.63B2.90B1.77B1.49B-587.00M-3.59B
Operating Cash Flow
3.02B3.78B2.48B1.85B-259.00M-3.01B
Investing Cash Flow
-753.00M-831.00M-726.00M826.00M-428.00M-1.01B
Financing Cash Flow
-765.00M-1.05B-549.00M-2.87B-88.00M3.02B

Rolls-Royce Holdings Technical Analysis

Technical Analysis Sentiment
Positive
Last Price885.40
Price Trends
50DMA
788.03
Positive
100DMA
736.09
Positive
200DMA
639.00
Positive
Market Momentum
MACD
26.79
Positive
RSI
59.06
Neutral
STOCH
44.11
Neutral
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 885.4 is above the 20-day moving average (MA) of 860.34, above the 50-day MA of 788.03, and above the 200-day MA of 639.00, indicating a bullish trend. The MACD of 26.79 indicates Positive momentum. The RSI at 59.06 is Neutral, neither overbought nor oversold. The STOCH value of 44.11 is Neutral, 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

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GBQQ
78
Outperform
£2.81B17.97-23.92%1.08%10.36%32.77%
GBRR
66
Neutral
$73.61B28.94
0.68%14.70%3.76%
66
Neutral
$4.47B12.215.40%3.65%4.14%-12.00%
$77.06B31.9217.85%1.65%
GBBAB
74
Outperform
£5.30B27.4844.03%0.76%3.34%481.76%
GBCHG
74
Outperform
£1.56B39.9211.62%1.80%8.00%674.47%
GBSNR
69
Neutral
£694.02M26.755.59%1.97%1.41%-16.76%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:RR
Rolls-Royce Holdings
885.40
427.63
93.41%
BAESF
BAE Systems
26.48
9.73
58.09%
GB:BAB
Babcock International
1,054.00
531.76
101.82%
GB:CHG
Chemring
586.00
216.42
58.56%
GB:SNR
Senior plc
170.20
14.56
9.35%
GB:QQ
QinetiQ
512.50
78.47
18.08%
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.