 Rolls-Royce (RR.) reinstated its dividend after a five-year absence and announced a £1bn share buyback programme, as the engine maker beat its previously raised annual guidance and bumped up mid-term forecasts on very strong demand at its civil aerospace arm. Underlying operating profit surged 57 per cent to £2.5bn, ahead of guidance of £2.1bn-£2.3bn and the analyst consensus of £2.4bn. The margin improved significantly to 13.8 per cent, up from 10.3 per cent in 2023. The performance was driven by the key civil aerospace division, where underlying profit was up 79 per cent, as large engine flying hours rose by almost a fifth and new engine deliveries improved by 16 per cent. The company pointed to "continued strong demand for travel and our growing installed widebody fleet". There are plans to re-enter the tough narrowbody side of the market, where Safran (FR:SAF) and GE Aerospace (US:GE) are the key players. The company's UltraFan demonstrator engine, which it has successfully tested, is crucial to this.Deep Dive: Rolls-RoyceWe looked at how Rolls-Royce has benefited from tailwinds in the form of the post-pandemic rebound of civil aviation and the pressing need for Nato countries to increase defence spendingGrowth was also robust at the company's smaller arms. Profit was up 16 per cent at the defence business, where wins included a £9bn submarine contract with the UK Ministry of Defence. At the power systems unit, profit was up 40 per cent as power generation demand led the way. Underlying free cash flow rose 89 per cent to £2.4bn, which helped the company pivot to a £475mn net cash position from a £2bn net debt position a year earlier. Total underlying cash costs as a proportion of underlying gross margin (TCC/GM) improved from 0.53 times to 0.47 times.Guidance for 2025 is for underlying operating profit and free cash flow of £2.7bn-£2.9bn. That would mean the company hits its 2027 targets, which it set out at its capital markets day, two years early.While management expects supply chain challenges to last for another 12-18 months, it also provided upgraded mid-term targets for 2028. It has pencilled in an adjusted operating profit of £3.6bn-£3.9bn and free cash flow of £4.2bn-£4.5bn. Chief executive Tufan Erginbilgic described these targets as a "milestone, not a destination". The turnaround under his leadership has meant the shares have now risen by around five times over the past two years, after rising another 15 per cent on the back of these results. Valuation risk has reduced given progress with free cash flow. Rolls-Royce trades on 29 times forward consensus earnings, in line with Safran and a discount to GE Aerospace. But there are also cheaper aerospace options to consider, such as Melrose Industries (MRO). Hold. |
Did anyone see the D Telegraph article in its business section, it’s worth a read.
I have put it on post 4389 below.
For some reason, maybe it’s too long, it does not appear hear. |
Skinny
Guffaw.Indeed. |
Good job it was a short post! :-) |
I'm guessing sticky key....
or the dreaded "Lag"
:) |
Thanks Skinny. I see there's a new remuneration package deal being constructed for Ergin at RR.
I wonder if EPS will be involved. Buy Back should help that along if so.
I must stop being so cynical. |
UBS RAISES ROLLS-ROYCE PRICE TARGET TO 1000 (640) PENCE - 'BUY' |
Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) and senior unsecured rating of Rolls-Royce (OTC:RYCEY) plc to 'BBB+' from 'BBB-', with a positive outlook on the IDR. |
Moody’s upgrades Rolls-Royce rating, maintains positive outlook
Investing.com -- Moody’s Ratings has upgraded the long-term issuer ratings of Rolls-Royce (OTC:RYCEY) plc, a manufacturer of aero-engines, propulsion and power systems, from Baa3 to Baa2. The ratings agency also upgraded the company’s backed senior unsecured Euro Medium Term Notes (EMTN) program rating from (P)Baa3 to (P)Baa2. The outlook for the company remains positive. |
Thank you. I have been reading it and will continue doing so and research it further.I am finding stocks of interest but they are at its ATH and the share price price always goes down as soon as I buy it for different reasons. Trying to avoid the same thing happening again. |
Shared24 there's more than enough information on the EEE board, not worth me replicating.
You're got advfn and LSE so simply read it and DYOR |
Fellow northerner here. I have been following RR for a while now but feel I have missed the boat. Few of my investments like ONT, AXL, KNOS have not done well for various reasons and have hopefully learnt from that.Thanks Cevo for your recommendation, I have taken an interest in EEE and have been reading about it. Would you mind sharing the bull case and bear case for EEE either here or on the EEE thread please? |
Careful
I admit to owning a flat cap (gift with YCCC logo), doing a spot of travelling and an ability to spell 'shareholders' correctly, like. |
MCunliffe1 thanks for your response.
I accept your points but I know this company inside out and I would recommend you keep an eye on it. |
Cev: I've managed to look at EEE finally as busy today with the yearly draw-down from my SIPP with Int. Inv.
There's a large 4% spread between Buy/Sell - that always concerns me. It is frequently traded and the share price graph is up and down quite a bit, perhaps because of the spread.
I'd class it in the same league as Atome - also on the AIM - and too risky for me plus no divi.
I see you are heavily invested with over 10million shares held and already showing a handsome (paper) profit given your buy prices earlier this year.
Appreciate your pointer to EEE but I'll pass thanks. |
On Thursday, Redburn-Atlantic analyst Olivier Brochet increased the price target for Rolls-Royce Holdings Plc (LON:RR:LN) (OTC: RYCEY) to GBP9.40, up from GBP6.90, while maintaining a Buy rating on the stock. The adjustment follows the company's full-year 2024 earnings release, which included an improved mid-term outlook. The stock, currently trading at $10.81, has shown remarkable momentum with a 126% return over the past year, according to InvestingPro data. |
Buys 5m, Sells 3m. The green line @8am was a buy of 300k given the 10p strike price.
Market makers again driving the price down. |
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