Rolls-Royce (RYCEY) AI Stock Analysis

• Market Cap: $88.14B
• Dividend Yield: 0.73%
• Average Volume (3M): 2.26M
• Price to Earnings (P/E): 27.2
• Beta (1Y): 1.15
• Revenue Growth: 17.89%
• EPS Growth: 6.77%
• Country: US
• Employees: 42,400
• Sector: Industrials
• Sector Strength: 79
• Industry: Aerospace & Defense
• EPS (TTM): 0.38
• Shares Outstanding: 8,474,194,000
• 10 Day Avg. Volume: 448,178
• 30 Day Avg. Volume: 2,258,837
• PEG Ratio: 4.02
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• 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

Rolls-Royce's financial turnaround is evident through improved income and cash flow metrics, although the negative equity on its balance sheet is a considerable risk. Technical indicators suggest the stock has strong momentum but caution is warranted due to potential overvaluation and an overbought status. Overall, the stock scores moderately due to these mixed factors.

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 generates revenue through the sale and servicing of its power and propulsion systems. The Civil Aerospace segment is a significant contributor, where the company designs, manufactures, and sells aircraft engines for large commercial aircraft, regional jets, and business aviation. This segment also includes aftermarket services, offering maintenance, repair, and overhaul (MRO) services that provide a steady stream of recurring revenue. In the Power Systems sector, Rolls-Royce provides high-speed reciprocating engines and complete power generation systems for a variety of industries, including marine, power generation, and industrial applications. The Defense segment supplies military aero engines and services to over 160 countries, ensuring long-term contracts and partnerships. The company's financial performance is also supported by strategic partnerships and collaborations with key players in the aerospace and defense industries, enhancing its market reach and technological capabilities.

Rolls-Royce Financial Statement Overview

Summary

Overall, Rolls-Royce is demonstrating 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. The company's ability to sustain its revenue growth and further stabilize its financial structure will be crucial for future performance.

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
	EBIT
2.91B	1.94B	339.00M	513.00M	-2.08B
	EBITDA
3.48B	3.74B	1.29B	996.00M	-166.00M
	Net Income Common Stockholders
2.52B	2.41B	-1.19B	120.00M	-3.17B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.36B	3.52B	2.40B	2.55B	3.42B
	Total Assets
35.69B	31.51B	29.45B	28.67B	29.52B
	Total Debt
5.13B	5.76B	5.96B	7.78B	7.33B
	Net Debt
-195.00M	2.25B	3.58B	5.24B	4.02B
	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: 10.44
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 10.44 is above the 20-day moving average (MA) of 9.43, above the 50-day MA of 9.59, and above the 200-day MA of 7.54, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 65.39 is Neutral, neither overbought nor oversold. The STOCH value of 98.26 is Negative, 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	79 Outperform	$110.78B	20.42	82.55%	2.73%	3.12%	-15.29%
NOC	73 Outperform	$70.73B	19.34	25.41%	1.68%	0.61%	77.28%
RTX	73 Outperform	$171.24B	36.10	7.54%	1.93%	15.11%	34.14%
GE	71 Outperform	$221.49B	32.39	28.09%	0.71%	-42.92%	109.75%
Sector *	64 Neutral	$4.28B	11.80	5.33%	250.46%	4.10%	-9.26%
RYCEY	53 Neutral	$88.14B	27.20	-65.53%	0.73%	17.89%	6.77%
BA	52 Neutral	$139.84B	―	-162.23%	―	-9.15%	-406.76%