Rolls-Royce (RYCEY) AI Stock Analysis

• Market Cap: $102.19B
• Dividend Yield: 0.64%
• Average Volume (3M): 70.64K
• Price to Earnings (P/E): 31.1
• Beta (1Y): 1.05
• Revenue Growth: 17.89%
• EPS Growth: 6.77%
• Country: US
• Employees: 42,400
• Sector: Industrials
• Sector Strength: 86
• Industry: Aerospace & Defense
• EPS (TTM): 0.15
• Shares Outstanding: 8,456,826,000
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 70,643
• PEG Ratio: <0.01
• Price to Book (P/B): -1.22
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.89
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 65 Neutral
• Price Target: $13.00 ▲(5.01%Upside)

The overall score reflects a strong technical outlook with momentum driving the stock price, but this is balanced by financial instability due to a weak balance sheet and concerns of overvaluation.

Rolls-Royce Business Overview & Revenue Model

Company Description

Rolls-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 Money

Rolls-Royce makes money primarily through the sale and servicing of aircraft engines, which is a significant revenue stream under its civil aerospace division. The company earns revenue by selling engines to airplane manufacturers and by providing long-term service agreements to airlines, known as TotalCare packages, which ensure ongoing maintenance and support. In addition to civil aerospace, Rolls-Royce generates income from its defense division by supplying and maintaining engines and related systems for military aircraft. The power systems division contributes to revenue by offering engines and power solutions for marine vessels, industrial applications, and energy markets. The company's nuclear segment also adds to its earnings through contracts for nuclear propulsion systems for submarines and civil nuclear services. Strategic partnerships and collaborations with industry players further enhance Rolls-Royce's revenue potential, along with government contracts and investments in research and development, which drive innovation and competitive advantage.

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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 12.38
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: 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 12.38 is above the 20-day moving average (MA) of 11.92, above the 50-day MA of 10.91, and above the 200-day MA of 8.47, indicating a bullish trend. The MACD of 0.33 indicates Positive momentum. The RSI at 70.82 is Negative, neither overbought nor oversold. The STOCH value of 66.73 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LMT	80 Outperform	$110.25B	20.33	82.55%	2.79%	3.12%	-15.29%
RTX	76 Outperform	$194.80B	42.75	7.54%	1.86%	15.11%	34.14%
NOC	72 Outperform	$71.92B	19.67	25.41%	1.85%	0.61%	77.28%
RYCEY	65 Neutral	$102.19B	31.14	-65.53%	0.64%	17.89%	6.77%
Sector *	65 Neutral	$10.39B	15.39	4.40%	2.00%	2.52%	-26.72%
GE	64 Neutral	$264.26B	38.64	28.09%	0.58%	-42.92%	109.75%
BA	58 Neutral	$149.86B	―	-162.23%	―	-9.15%	-406.76%