F – Financials
- Revenue: £17.85B in 2024 (+15% YoY), driven by Civil Aerospace recovery and Defence contracts[1][5].
- Profitability:
- Underlying operating profit: £2.5B (+57% YoY), margin improved to 13.8%[1].
- Free cash flow: £2.4B (+88% YoY), with net cash position of £475M (vs. net debt of £1.95B in 2023)[1][5].
- Dividend: 6.0p/share (30% payout ratio), reinstated after a 4-year hiatus[1].
- Valuation:
- Forward P/E: 25.5x (2025E), reflecting growth expectations[4].
- Market cap: £68B, up 800% since 2023 lows[4].
A – Advancement Drivers
- Civil Aerospace Recovery:
- Large engine flying hours (EFH) at 100% of 2019 levels, driven by Asian travel rebound[5].
- New orders: 60 Trent XWB engines for IndiGo, VietJet, and Starlux deals[5].
- Defence Growth:
- Increased global military spending; recent contract wins in naval and aerospace sectors[5].
- Power Systems Expansion:
- Rising demand for data center power solutions (AI/cloud) and governmental defense applications[5].
- Strategic Initiatives:
- £1B share buyback (2025) and upgraded 2028 targets: £4.2B-£4.5B free cash flow, 17% operating margin[1][4].
C – Competitive Landscape & Sector Outlook
Competitors:
| Company | Strength | RR Countermove |
|---|---|---|
| General Electric | Broad industrial portfolio | Focus on premium engine technology |
| Pratt & Whitney | Narrow-body engine dominance | Trent XWB/UltraFan efficiency |
| Siemens | Energy solutions | Data center and defense focus |
Sector Outlook:
- Aerospace: Global air travel to exceed pre-pandemic levels by 2026, driven by Asia-Pacific[5].
- Defence: NATO spending targets (2% GDP) to sustain growth; hypersonic and AI-driven systems in demand[6].
- Power Systems: Data center market CAGR of 10% (2025-2030), fueled by AI/cloud expansion[5].
T – Target Price
| Scenario | 12-Month Target | Key Drivers |
|---|---|---|
| Bear | 600p | Tariff impacts, supply chain disruptions |
| Base | 800p | Execution of 2025 guidance, buyback support |
| Bull | 1,000p+ | Defence contract wins, margin expansion |
Technical support: ~635p (April 2025 low)[3].
O – Obstacles
- Supply Chain Risks: Persistent delays in aerospace components[5].
- Geopolitical: US/EU tariffs on imports (e.g., engines) could dent margins[3].
- Environmental Pressures: Net-zero mandates require R&D in sustainable tech (e.g., SAF, hydrogen)[6].
- Valuation Concerns: High P/E (25.5x) leaves little room for earnings misses[4].
R – Recommendation
Buy for Strategic Growth Exposure
- Near-term: Leverage share buybacks and Civil Aerospace recovery.
- Long-term: Defence and Power Systems diversification mitigates cyclical risks.
Monitor:
- Q1 2025 EFH trends (May 2025 update).
- US/EU tariff negotiations (Q2-Q3 2025).
- Sustainable aviation fuel (SAF) adoption rates.
Rolls-Royce’s transformation under CEO Tufan Erginbilgic positions it as a high-margin player in aerospace, defence, and energy. While tariffs and valuation pose risks, its upgraded targets and £1B buyback signal confidence in sustained growth[1][4][5].
Citations:
[1] https://www.investegate.co.uk/announcement/rns/rolls-royce-holdings–rr./full-year-results-2024/8754593
[2] https://companiesmarketcap.com/gbp/rolls-royce-holdings/revenue/
[3] https://www.fool.co.uk/2025/04/08/whats-happening-to-the-rolls-royce-share-price-now/
[4] https://www.fool.co.uk/2025/04/01/forecast-in-12-months-the-rolls-royce-share-price-could-be/
[5] https://www.eastmidlandsbusinesslink.co.uk/mag/manufacturing/rolls-royces-transformation-on-track/
[6] https://businessmodelanalyst.com/rolls-royce-swot-analysis/
[7] https://luckboxmagazine.com/trades/rolls-royce-stock-rally-keep-flying/
[8] https://www.morningstar.co.uk/uk/news/261625/rolls-royce-earnings-increasing-fair-value-as-defense-stocks-rally.aspx
[9] https://www.fool.co.uk/2025/01/06/my-rolls-royce-share-price-prediction-for-2025/
[10] https://www.ig.com/uk/news-and-trade-ideas/when-is-rolls-royce-s-earnings-date-and-what-should-investors-ex-250225
[11] https://thestrategystory.com/blog/rolls-royce-swot-analysis/
[12] https://suppliers.rolls-royce.com/GSPWeb/ShowProperty?nodePath=%2FBEA+Repository%2FGlobal+Supplier+Portal%2FNoticesToSuppliers%2Fnts_603%2F%2FntsFile
[13] https://markets.ft.com/data/equities/tearsheet/summary?s=rr.%3Alse
[14] https://stockanalysis.com/quote/lon/RR/market-cap/
[15] https://uk.investing.com/news/stock-market-news/rollsroyce-share-price-triangle-pattern-points-to-a-surge-in-2025-3884084
[16] https://www.globenewswire.com/news-release/2025/04/03/3054935/0/en/Rolls-Royce-Aerospace-Defense-Industry-Playbook-2025-Strategy-Focus-Key-Strategies-Plans-SWOT-Trends-Growth-Opportunities-Market-Outlook.html
[17] https://www.morningstar.co.uk/uk/news/261824/stock-of-the-week-rolls-royce-shares-up-35-in-2025-on-defense-rally.aspx
[18] https://www.hl.co.uk/shares/share-research/rolls-royce-smashes-expectations-upgrades-mid-term-targets
[19] https://poundf.co.uk/rolls-royce
[20] https://valutico.com/from-crisis-to-opportunity-rolls-royces-journey/
[21] https://www.raconteur.net/risk-regulation/supply-chains-geopolitical
[22] https://invezz.com/news/2025/01/06/rolls-royce-share-price-has-a-catalyst-and-a-potential-risk/
[23] https://www.sharesmagazine.co.uk/news/shares/rolls-royce-shares-soar-to-record-high-on-guidance-upgrades-and-1-billion-buyback
[24] https://www.ii.co.uk/analysis-commentary/how-will-rolls-royce-and-bae-fare-2025-ii533724
[25] https://uk.finance.yahoo.com/news/10-000-invested-rolls-royce-075047420.html
[26] https://www.logisticsbusiness.com/transport-distribution/persistent-rolls-royce-supply-chain-issues/
[27] https://www.fool.co.uk/2025/03/16/25000-invested-in-rolls-royce-shares-3-years-ago-is-now-worth/
[28] https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/results/2024-full-year-results/rr-plc-holdings-2024-full-year-results-press-release.pdf
[29] https://prod-aws.londonstockexchange.com/news-article/43AP/annual-financial-report/16928901
[30] https://markets.ft.com/data/announce/detail?dockey=1323-16928901-7PTM97QR8IIFD17MHDMSQULTFB
[31] https://www.hl.co.uk/shares/shares-search-results/r/rolls-royce-holdings-plc-ordinary-20p
[32] https://uk.finance.yahoo.com/quote/RR.L/history/
[33] https://www.cityam.com/rolls-royce-ftse-100-giant-worth-60bn-after-shares-rebound/
[34] https://www.rolls-royce.com/media/press-releases/2025/27-02-2025-rr-holdings-plc-2024-full-year-results.aspx
[35] https://www.londonstockexchange.com/news-article/RR./share-buyback-programme-of-up-to-ps1-billion/16917103
[36] https://finance.yahoo.com/quote/RR.L/history/
[37] https://companiesmarketcap.com/gbp/rolls-royce-holdings/marketcap/
[38] https://markets.investorschronicle.co.uk/data/equities/tearsheet/forecasts?s=RR.%3ALSE
[39] https://www.fool.co.uk/2025/04/19/are-rolls-royce-shares-still-a-bargain-in-2025/
[40] https://www.rolls-royce.com/investors/2024-full-year-results.aspx
[41] https://www.londonstockexchange.com/stock/RR./rolls-royce-holdings-plc/company-page
[42] https://uk.finance.yahoo.com/news/another-35-2025-rolls-royce-153300885.html
[43] https://www.rolls-royce.com/products-and-services/civil-aerospace/future-products.aspx
[44] https://www.rolls-royce.com/about/our-strategy.aspx
[45] https://www.rolls-royce.com/innovation/ultrafan.aspx
[46] https://uk.finance.yahoo.com/news/forecast-12-months-rolls-royce-061100651.html
[47] https://www.rolls-royce.com/innovation.aspx
[48] https://www.rolls-royce.com/media/press-releases/2024/22-07-2024-rolls-royce-awarded-national-space-innovation-programme-funding-for-space-nuclear-power.aspx
[49] https://www.nasdaq.com/articles/can-rolls-royce-stock-continue-its-strong-run-2025
[50] https://uk.finance.yahoo.com/news/rolls-royce-aerospace-defense-industry-101700479.html
[51] https://tharsus.com/projects/rolls-royce-and-aerospace-robotics/
[52] https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/annual-report/2025/2024-annual-report.pdf
[53] https://uk.finance.yahoo.com/news/rolls-royce-aerospace-defense-industry-101700792.html
[54] https://www.fool.co.uk/2024/12/04/can-rolls-royce-shares-continue-to-outperform-in-2025/
[55] https://www.rolls-royce.com/about/engineforgrowth.aspx
[56] https://www.directorstalkinterviews.com/rolls-royce-holdings-plc-rr-l-navigating-the-aerospace-defence-sector-with-strategic-growth/4121192112
[57] https://www.fool.co.uk/2025/01/17/can-rolls-royce-shares-soar-further-in-2025/
[58] https://www.fitchratings.com/research/corporate-finance/fitch-upgrades-rolls-royce-to-bbb-outlook-positive-06-03-2025
[59] https://www.rolls-royce.com/country-sites/india/discover/2025/achieving-true-defence-indigenisation-requires-ip-development-in-country.aspx
[60] https://www.rolls-royce.com/investors/capital-markets-day/defence.aspx
[61] https://www.fool.co.uk/2025/04/01/forecast-in-12-months-the-rolls-royce-share-price-could-be/
[62] https://uk.finance.yahoo.com/news/high-rolls-royce-share-price-151000649.html
[63] https://www.morningstar.co.uk/uk/news/AN_1740647768016959000/rolls-royce-restores-payout-as-says-turnaround-two-years-ahead-of-plan.aspx
[64] https://www.fool.co.uk/2025/03/24/prediction-12-months-from-now-5000-invested-in-rolls-royce-shares-could-be-worth/
[65] https://www.proactiveinvestors.co.uk/companies/news/1063874/forget-the-bull-run-rolls-royce-worth-820p-says-brokerage-1063874.html
[66] https://www.macroaxis.com/valuation/RR.LSE/Rolls-Royce-Holdings-PLC
[67] https://www.tradingview.com/symbols/LSE-RR./forecast/
[68] https://www.marketbeat.com/stocks/LON/RR/forecast/
[69] https://www.fool.co.uk/2025/03/29/heres-what-10000-in-rolls-royce-shares-could-be-worth-a-year-from-now/
[70] https://uk.finance.yahoo.com/news/prediction-12-months-now-5-074100416.html
[71] https://www.fool.co.uk/2024/11/15/how-much-are-rolls-royce-shares-really-worth-as-we-approach-2025/
[72] https://www.fool.co.uk/2025/03/20/up-another-35-in-2025-can-the-rolls-royce-share-price-keep-climbing-forever/
[73] https://www.morningstar.co.uk/uk/news/261824/stock-of-the-week-rolls-royce-shares-up-35-in-2025-on-defense-rally.aspx
[74] https://www.supplychainbrain.com/articles/37262-rolls-royce-says-supply-chain-disruptions-remain-key-concern
[75] https://www.hl.co.uk/shares/share-research/rolls-royce-smashes-expectations-upgrades-mid-term-targets
[76] https://glginsights.com/articles/rolls-royce-aerospace/
[77] https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/about/rolls-royce-principal-risks-ar23.pdf
[78] https://www.rolls-royce.com/media/our-stories/discover/2019/a-new-challenge-a-blank-sheet-of-paper-and-a-tight-deadline.aspx
[79] https://www.rolls-royce.com/sustainability/customers-and-suppliers.aspx
[80] https://www.independentrollsroycemanchester.co.uk/garage-services/modern-rolls-royce-common-problems/
[81] https://www.sharesmagazine.co.uk/shares/share/RR./historic-prices
[82] https://www.perplexity.ai/finance/RR
[83] https://www.aero-mag.com/future-funding-confirmed-rolls-royce-engine-development
[84] https://seekingalpha.com/article/4744194-is-rolls-royce-stock-still-a-top-aerospace-buy-in-2025-after-a-147-percent-surge
[85] https://www.ig.com/uk/news-and-trade-ideas/when-is-rolls-royce-s-earnings-date-and-what-should-investors-ex-250225
[86] https://www.globenewswire.com/news-release/2025/04/03/3054935/28124/en/Rolls-Royce-Aerospace-Defense-Industry-Playbook-2025-Strategy-Focus-Key-Strategies-Plans-SWOT-Trends-Growth-Opportunities-Market-Outlook.html
[87] https://capital.com/en-gb/analysis/rolls-royce-share-price-prediction
[88] https://www.fool.co.uk/2024/11/16/how-high-can-the-rolls-royce-share-price-go-lets-ask-the-experts/
Leave a Reply