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Rolls-Royce (RYCEY)
OTHER OTC:RYCEY
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Rolls-Royce
(OTC:RYCEY)
Rating:68Neutral
Price Target:
$15.50
▲(6.46% Upside)
Rolls-Royce (RYCEY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$125.84B
Dividend Yield0.9%
Average Volume (3M)2.27M
Price to Earnings (P/E)16.8
Beta (1Y)1.04
Revenue Growth12.65%
EPS Growth153.93%
CountryUS
Employees42,400
SectorIndustrials
Sector Strength78
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.21
Shares Outstanding8,438,495,000
10 Day Avg. Volume1,878,560
30 Day Avg. Volume2,273,994
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue5.83
Enterprise Value/Gross Profit26.11
Enterprise Value/Ebitda31.64
Forecast
1Y Price Target
$15.50Price Target Upside6.46% Upside
Rating ConsensusHold
Number of Analyst Covering1
Rolls-Royce Business Overview & Revenue Model
Company DescriptionRolls-Royce Holdings plc is a British multinational company specializing in power and propulsion systems. The company operates in several sectors, including civil aerospace, defense, marine, and power systems. Rolls-Royce is renowned for its high-performance aircraft engines, as well as its innovative technologies in nuclear power and marine propulsion. The company is committed to sustainable solutions, focusing on reducing environmental impact while delivering reliable and efficient power systems for various applications.
How the Company Makes MoneyRolls-Royce generates revenue through several key streams, primarily in the civil aerospace and defense sectors. In civil aerospace, the company earns money by manufacturing and servicing aircraft engines for commercial airlines and business jets, with a significant portion of revenue coming from long-term service agreements and aftermarket support. In the defense sector, Rolls-Royce provides engines and power systems for military aircraft, naval vessels, and other defense applications, benefiting from government contracts and partnerships. Additionally, the power systems segment supplies engines and propulsion solutions for marine and industrial applications. The company also engages in joint ventures and partnerships that enhance its technological capabilities and market reach, contributing further to its earnings. The focus on innovation and sustainability, alongside a strong portfolio of service agreements, plays a crucial role in Rolls-Royce’s revenue generation strategy.
Rolls-Royce Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: 11.31%|
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance with significant improvements in operating profit, cash flow, and margins across divisions, along with raised guidance for 2025. However, ongoing supply chain challenges and specific engine issues were acknowledged as areas needing attention.Q2-2025 Updates
Positive Updates
Record Operating Profit
Operating profit increased by 50% year-on-year to GBP 1.7 billion, with a group operating margin of 19.1%, a 4.9 percentage point increase over last year.
Strong Free Cash Flow
Free cash flow was GBP 1.6 billion, 37% higher than last year, driven by strong operating profit and LTSA balance growth.
Civil Aerospace Success
Civil Aerospace operating profit grew by 63% to GBP 1.2 billion, with an operating margin increase of 7.1 percentage points to 24.9%.
Power Systems Performance
Power Systems achieved an 89% increase in operating profit to GBP 313 million, with an operating margin increase of 5.6 percentage points to 15.3%.
Defence Order Backlog
Defence division secured a record order backlog of GBP 18.8 billion, equivalent to approximately four years of revenue.
Raised Guidance for 2025
Guidance for 2025 was raised, expecting underlying operating profit of GBP 3.1 billion to GBP 3.2 billion and free cash flow of GBP 3 billion to GBP 3.1 billion.
Shareholder Returns
Announced an interim dividend of 4.5p per share and a GBP 1 billion share buyback program, with GBP 500 million already completed.
Negative Updates
Supply Chain Challenges
Industry-wide supply chain constraints continue to impact performance, leading to product cost inflation and affecting turnaround times.
Trent 1000 Engine Issues
Some customers expressed dissatisfaction due to time on wing issues with the Trent 1000 engines, although improvements are underway.
Company Guidance
During the call, Rolls-Royce raised its full-year 2025 guidance, expecting underlying operating profit to be between GBP 3.1 billion and GBP 3.2 billion, driven by improvements across all core divisions. The company reported strong first-half results with a group operating profit of GBP 1.7 billion, a 50% increase from the previous year, and a group operating margin of 19.1%, up 4.9 percentage points. Civil Aerospace particularly excelled, with an operating margin increase of 7.1 percentage points to 24.9% and a 28% growth in large engines aftermarket revenue. Free cash flow for the group reached GBP 1.6 billion, marking a 37% increase from the prior year. Rolls-Royce's strategic initiatives, such as renegotiating contracts and improving time on wing, contributed significantly to these results. The company also announced an interim dividend of 4.5p per share and has progressed halfway through a GBP 1 billion share buyback plan.Rolls-Royce Financial Statement Overview
Summary
Rolls-Royce is showing a recovery in income and cash flow, but the balance sheet remains weak with negative equity and high liabilities posing risks.Income Statement
Rolls-Royce has shown a strong recovery in its income statement metrics over recent years. The gross profit margin stands at 22.32%, with a notable improvement in net profit margin to 13.34% in the latest year. Revenue growth rate is robust at 14.68%, indicating a positive trajectory. The EBIT margin of 15.37% and EBITDA margin of 18.42% demonstrate improved operational efficiency. However, the company has faced volatility in net income in previous years, which remains a potential risk.75
Positive
Balance Sheet
The balance sheet of Rolls-Royce reveals significant challenges, with a negative stockholders' equity indicating financial instability. The debt-to-equity ratio is not meaningful due to negative equity, posing a risk of high leverage. Although total assets have increased, the equity ratio is negative, underlining the company’s reliance on liabilities. Despite improvements in liquidity, the balance sheet stability remains a concern.40
Negative
Cash Flow
Rolls-Royce's cash flow statement shows encouraging trends with a substantial free cash flow growth rate of 63.36%. The operating cash flow to net income ratio is 1.5, indicating strong cash generation relative to earnings. However, the free cash flow to net income ratio of 1.15 suggests a need for careful capital expenditure management. The positive cash flow trajectory is a strength, but historical cash flow volatility poses a risk.65
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 18.91B | 16.49B | 13.52B | 11.22B | 11.82B |
| Gross Profit | 4.22B | 3.62B | 2.76B | 2.14B | -210.00M |
| EBITDA | 3.48B | 3.74B | 1.29B | 996.00M | -166.00M |
| Net Income | 2.52B | 2.41B | -1.19B | 120.00M | -3.17B |
Balance Sheet | |||||
| Total Assets | 35.69B | 31.51B | 29.45B | 28.67B | 29.52B |
| Cash, Cash Equivalents and Short-Term Investments | 5.36B | 3.52B | 2.40B | 2.55B | 3.42B |
| Total Debt | 5.13B | 5.76B | 5.96B | 7.78B | 7.33B |
| Total Liabilities | 36.57B | 35.14B | 35.47B | 33.31B | 34.39B |
| Stockholders Equity | -912.00M | -3.68B | -6.05B | -4.66B | -4.90B |
Cash Flow | |||||
| Free Cash Flow | 2.90B | 1.77B | 1.25B | -818.00M | -3.96B |
| Operating Cash Flow | 3.78B | 2.48B | 1.85B | -259.00M | -3.01B |
| Investing Cash Flow | -831.00M | -726.00M | 826.00M | -428.00M | -1.01B |
| Financing Cash Flow | -1.05B | -549.00M | -2.87B | -88.00M | 3.02B |
Rolls-Royce Technical Analysis
Positive
14.56
Price Trends
13.15
Positive
11.67
Positive
9.68
Positive
Market Momentum
0.48
Negative
63.43
Neutral
79.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RYCEY, the sentiment is Positive. The current price of 14.56 is above the 20-day moving average (MA) of 13.96, above the 50-day MA of 13.15, and above the 200-day MA of 9.68, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 63.43 is Neutral, neither overbought nor oversold. The STOCH value of 79.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RYCEY.
Rolls-Royce Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $286.00B | 37.65 | 40.20% | 0.48% | -32.80% | 69.39% | |
76 Outperform | $207.58B | 34.07 | 10.13% | 1.70% | 15.44% | 164.00% | |
71 Outperform | $83.58B | 21.46 | 26.50% | 1.45% | -0.65% | 77.20% | |
68 Neutral | $125.84B | 16.83 | 3725.44% | 0.90% | 12.65% | 153.93% | |
64 Neutral | $100.75B | 24.30 | 73.06% | 2.98% | 1.09% | -35.50% | |
63 Neutral | $10.80B | 16.80 | 6.58% | 2.07% | 2.49% | -15.77% | |
56 Neutral | $176.33B | ― | -162.23% | ― | 2.41% | -193.57% |
* Industrials Sector Average
Performance Comparison
RYCEY
Rolls-Royce
14.56
8.18
128.21%
BA
Boeing
235.26
55.27
30.71%
GE
GE Aerospace
267.85
99.52
59.12%
LMT
Lockheed Martin
437.56
-108.18
-19.82%
NOC
Northrop Grumman
583.96
86.04
17.28%
RTX
Raytheon Technologies
154.09
38.46
33.26%
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.