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Rolls-Royce Holding PLC (RYCEY)
:RYCEY
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Rolls-Royce
(OTC:RYCEY)
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Rating:68Neutral
Price Target:
$17.00
▲(15.49% Upside)
Rolls-Royce's overall stock score is driven by a positive earnings call and strong technical indicators, despite a weak balance sheet. The company's strategic growth and improved financial guidance are significant positives, but the overbought technical indicators and balance sheet concerns temper the outlook.
Rolls-Royce (RYCEY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$125.95B
Dividend Yield0.91%
Average Volume (3M)241.22K
Price to Earnings (P/E)16.9
Beta (1Y)0.91
Revenue Growth12.65%
EPS Growth153.93%
CountryUS
Employees42,400
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.21
Shares Outstanding8,412,529,000
10 Day Avg. Volume0
30 Day Avg. Volume241,224
Financial Highlights & Ratios
PEG Ratio5.48
Price to Book (P/B)-52.26
Price to Sales (P/S)2.52
P/FCF Ratio16.46
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue5.64
Enterprise Value/Gross Profit22.95
Enterprise Value/Ebitda30.68
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.39
Revenue Forecast (FY)$26.47B
Rolls-Royce 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 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: |
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Positive
The earnings call reflects strong financial performance and strategic growth, particularly in Civil Aerospace and Power Systems, with significant progress in contract renegotiations and shareholder returns. However, ongoing supply chain challenges and customer relationship issues were noted. The overall sentiment is positive due to the outweighing highlights.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Operating profit of GBP 1.7 billion, a 50% increase from last year. Free cash flow was GBP 1.6 billion, 37% higher than the previous year. Group revenue grew by 13% to GBP 9.1 billion.
Civil Aerospace Success
Civil Aerospace's operating profit grew by 63% to GBP 1.2 billion. Operating margin increased by 7.1 percentage points to 24.9%. Aftermarket revenue for large engines grew by 28%.
Power Systems and Defence Growth
Power Systems' operating profit increased by 89%, with a 5.6 percentage point rise in operating margin to 15.3%. Defence recorded an order backlog of GBP 18.8 billion, a record level.
Strategic Initiatives and Investments
GBP 1 billion share buyback progressing with GBP 500 million completed. Interim dividend declared at 4.5p per share. Significant progress in renegotiating contracts, leading to GBP 1.4 billion cash benefits over contract life.
Guidance Upgrade
Raised 2025 guidance for underlying operating profit to GBP 3.1 billion to GBP 3.2 billion and free cash flow to GBP 3 billion to GBP 3.1 billion.
Negative Updates
Supply Chain Constraints
Continued industry-wide supply chain constraints impacting performance. Product cost inflation due to supply chain challenges.
Customer Relationship Challenges
Some customers expressed dissatisfaction, particularly related to Trent 1000 time on wing issues.
Company Guidance
During the call, Rolls-Royce provided an optimistic update on its financial guidance for the full year 2025, driven by strong performance across its divisions. The company raised its underlying operating profit guidance to GBP 3.1 billion to GBP 3.2 billion, with free cash flow expected to reach GBP 3 billion to GBP 3.1 billion. This positive outlook is attributed to significant improvements in operational efficiency and strategic progress, particularly in Civil Aerospace, where operating profit grew by 63% to GBP 1.2 billion, and Power Systems, which saw an 89% increase in operating profit to GBP 313 million. The group's overall operating margin rose to 19.1%, a 4.9 percentage point increase from the previous year. Rolls-Royce also highlighted its commitment to shareholder returns, announcing an interim dividend of 4.5p per share and detailing a GBP 1 billion share buyback plan. The company continues to address supply chain challenges, achieving a 15% increase in parts availability, and is investing strategically to foster long-term growth, particularly in areas like small modular reactors (SMRs) and digital transformation.Rolls-Royce Financial Statement Overview
Summary
Rolls-Royce is showing a financial turnaround with strong income statement recovery and cash flow improvement. However, the balance sheet remains a significant weakness, with negative equity and high liabilities posing potential 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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 19.54B | 18.91B | 16.49B | 13.52B | 11.22B | 11.49B |
| Gross Profit | 4.80B | 4.22B | 3.62B | 2.76B | 2.14B | 1.11B |
| EBITDA | 3.59B | 3.48B | 3.74B | 1.25B | 996.00M | 222.00M |
| Net Income | 5.79B | 2.52B | 2.41B | -1.27B | 120.00M | -3.17B |
Balance Sheet | ||||||
| Total Assets | 37.94B | 35.69B | 31.51B | 29.45B | 28.67B | 29.52B |
| Cash, Cash Equivalents and Short-Term Investments | 6.06B | 5.36B | 3.52B | 2.40B | 2.55B | 3.49B |
| Total Debt | 4.91B | 5.13B | 5.76B | 5.96B | 7.78B | 7.33B |
| Total Liabilities | 35.51B | 36.57B | 35.14B | 35.47B | 33.31B | 34.39B |
| Stockholders Equity | 2.41B | -912.00M | -3.68B | -6.05B | -4.66B | -4.90B |
Cash Flow | ||||||
| Free Cash Flow | 3.18B | 2.90B | 1.77B | 1.25B | -818.00M | -3.96B |
| Operating Cash Flow | 4.13B | 3.78B | 2.48B | 1.85B | -259.00M | -3.01B |
| Investing Cash Flow | -950.00M | -831.00M | -726.00M | 826.00M | -428.00M | -1.01B |
| Financing Cash Flow | -1.36B | -1.05B | -549.00M | -2.87B | -88.00M | 3.02B |
Rolls-Royce Technical Analysis
Neutral
14.72
Price Trends
15.20
Negative
14.37
Positive
12.03
Positive
Market Momentum
-0.04
Positive
46.84
Neutral
23.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RYCEY, the sentiment is Neutral. The current price of 14.72 is below the 20-day moving average (MA) of 15.05, below the 50-day MA of 15.20, and above the 200-day MA of 12.03, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 46.84 is Neutral, neither overbought nor oversold. The STOCH value of 23.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RYCEY.
Rolls-Royce Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $324.11B | 40.97 | 42.74% | 0.44% | -19.21% | 31.83% | |
75 Outperform | $81.15B | 20.41 | 26.15% | 1.54% | -0.14% | 72.35% | |
75 Outperform | $237.28B | 36.34 | 10.49% | 1.47% | 8.79% | 39.63% | |
70 Outperform | $106.06B | 25.59 | 62.78% | 2.88% | 2.88% | -35.15% | |
68 Neutral | $125.95B | 16.87 | 3725.44% | 0.91% | 12.65% | 153.93% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
47 Neutral | $147.92B | ― | ― | ― | 10.19% | -6.03% |
* Industrials Sector Average
RYCEY
Rolls-Royce
14.98
7.71
106.05%
BA
Boeing
194.61
45.65
30.65%
GE
GE Aerospace
307.27
123.85
67.52%
LMT
Lockheed Martin
458.35
-96.62
-17.41%
NOC
Northrop Grumman
568.61
44.11
8.41%
RTX
RTX
176.97
54.86
44.93%
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.