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Rolls-Royce
(OTC:RYCEY)
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Rating:70Outperform
Price Target:
$20.00
▼(-3.75% Downside)
Action:Reiterated
Date:08/30/26
The score is driven primarily by strong underlying financial improvement (notably profitability and cash flow) and supportive technical momentum. These positives are moderated by balance-sheet leverage risk and a relatively expensive valuation (high P/E with a low dividend yield).
Positive Factors
Recurring Aftermarket Revenue
The installed engine base supports recurring maintenance, repair, parts, and operational-support revenue over many years. This aftermarket model can improve visibility, deepen customer relationships, and make the business less dependent on new engine deliveries in any single period.
Negative Factors
Meaningful Leverage
Although equity returned to positive territory, debt remains high relative to the equity base. This leverage can limit financial flexibility and increase pressure on cash allocation if earnings weaken or working-capital requirements rise, making the balance sheet a continuing risk.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring Aftermarket Revenue
The installed engine base supports recurring maintenance, repair, parts, and operational-support revenue over many years. This aftermarket model can improve visibility, deepen customer relationships, and make the business less dependent on new engine deliveries in any single period.
Read all positive factors
Rolls-Royce (RYCEY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$152.23B
Dividend Yield0.81%
Average Volume (3M)184.70K
Price to Earnings (P/E)38.5
Beta (1Y)1.03
Revenue Growth23.00%
EPS Growth-45.26%
CountryUS
Employees43,162
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.36
Shares Outstanding8,294,186,000
10 Day Avg. Volume0
30 Day Avg. Volume184,698
Financial Highlights & Ratios
PEG Ratio0.14
Price to Book (P/B)36.08
Price to Sales (P/S)4.63
P/FCF Ratio26.67
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue6.81
Enterprise Value/Gross Profit23.77
Enterprise Value/Ebitda24.04
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.6
Revenue Forecast (FY)$31.95B
Rolls-Royce Business Overview & Revenue Model
Company Description
Rolls-Royce Holdings plc operates as a prominent global industrial technology corporation, headquartered in London, United Kingdom, since its founding in 1884. The company's diverse activities are organized into four key divisions: Civil Aerospace...
How the Company Makes Money
Rolls-Royce makes money primarily by selling aerospace engines and, critically, by providing long-term aftermarket services that generate recurring revenue over the life of an engine. A major portion of its economics comes from servicing arrangeme...
Rolls-Royce Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2027
Earnings Call Sentiment Positive
The call presents a strongly positive operational and financial transformation story: significant revenue, profit and free cash flow growth in 2025, upgraded midterm targets, major LTSA and aftermarket margin improvements, a substantial multiyear buyback and rising shareholder distributions. Challenges remain—notably supply‑chain and product cost inflation, near‑term shop‑visit and LTSA timing effects, higher investments and some one‑off accounting impacts—but management provides clear plans and targets to mitigate these and highlights that much of the LTSA cash upside will accrue beyond the midterm. Overall, the positive achievements and upgraded guidance outweigh the headwinds.Positive Updates
Group Revenue and Profit Growth
Group revenue grew 14% to GBP 20.0 billion and group operating profit rose ~40% to GBP 3.5 billion (5x vs 2022). Operating margin improved by 3.2 percentage points to 17.3%.
Negative Updates
Ongoing Supply Chain Headwinds and Product Cost Inflation
Industry supply‑chain constraints persist into 2026 with product cost inflation; management expects supply chain cash drag to continue through 2026 and be gone only by the midterm. An additional charge of GBP 161 million (mostly H1) related to product cost inflation was recorded.
Read all updates
Q4-2025 Updates
Positive
Negative
Group Revenue and Profit Growth
Group revenue grew 14% to GBP 20.0 billion and group operating profit rose ~40% to GBP 3.5 billion (5x vs 2022). Operating margin improved by 3.2 percentage points to 17.3%.
Read all positive updates
Company Guidance
Rolls‑Royce guided to 2026 underlying operating profit of £4.0–4.2bn and free cash flow of £3.6–3.8bn (noting a continuing supply‑chain headwind that should be gone by the midterm), with net LTSA balance growth broadly similar to 2025, large‑engine flying hours of 115–120% of 2019, shop visits of 1,480–1,550 and an expected supply‑chain cash drag of c.£150–200m; they flagged higher net investments, an outflow on provisions and cash tax c.£200m higher versus 2025. For the 2028 midterm they upgraded targets to operating profit £4.9–5.2bn, operating margin 18–20%, free cash flow £5.0–5.3bn and return on capital 23–26%; divisional midterm margins include Civil Aerospace 21–23% (installed fleet growth 6–7% p.a.), Power Systems 18–20% (OE growth in Power Gen and Governmental ~20% p.a.), and Defence 14–16%. They expect net LTSA balance growth of c.£0.8–1.2bn to midterm with large‑engine flying hours rising to 130–140% of 2019 and shop visits peaking in 2026 then falling to 1,300–1,400 in 2028, assume a blended FX of ~$1.33/£ (vs $1.44 in 2025), and built in material LTSA margin upside (contract margins up ~19pp 2022–28 with an incremental +2pp contract and +8pp LTSA improvement vs prior targets); capital returns include a £7–9bn buyback program 2026–28 (£2.5bn in 2026 including £200m already executed) alongside a 2025 final dividend of 5p (full year 9.5p, 32% payout) and a commitment to return >75% of FCF 2026–28.Rolls-Royce Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
58
Neutral
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 23.09B | 21.21B | 18.91B | 16.49B | 13.52B | 11.22B |
| Gross Profit | 6.62B | 6.17B | 4.22B | 3.62B | 2.76B | 2.14B |
| EBITDA | 6.55B | 4.47B | 3.48B | 3.74B | 1.71B | 1.48B |
| Net Income | 3.03B | 5.71B | 2.52B | 2.41B | -1.27B | 120.00M |
Balance Sheet | ||||||
| Total Assets | 39.01B | 38.05B | 35.69B | 31.51B | 29.45B | 28.67B |
| Cash, Cash Equivalents and Short-Term Investments | 6.50B | 6.51B | 5.36B | 3.52B | 2.40B | 2.55B |
| Total Debt | 4.37B | 4.27B | 5.13B | 5.76B | 5.96B | 7.78B |
| Total Liabilities | 36.12B | 35.36B | 36.57B | 35.14B | 35.47B | 33.31B |
| Stockholders Equity | 2.85B | 2.72B | -912.00M | -3.68B | -6.05B | -4.66B |
Cash Flow | ||||||
| Free Cash Flow | 4.42B | 3.68B | 2.90B | 1.77B | 1.25B | -818.00M |
| Operating Cash Flow | 5.08B | 4.29B | 3.78B | 2.48B | 1.85B | -259.00M |
| Investing Cash Flow | -885.97M | -885.17M | -831.00M | -726.00M | 826.00M | -428.00M |
| Financing Cash Flow | -3.79B | -2.77B | -1.05B | -549.00M | -2.87B | -88.00M |
Rolls-Royce Technical Analysis
Negative
20.78
Price Trends
20.00
Negative
19.03
Negative
17.76
Positive
Market Momentum
-0.35
Positive
33.98
Neutral
5.15
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RYCEY, the sentiment is Negative. The current price of 20.78 is above the 20-day moving average (MA) of 19.35, above the 50-day MA of 20.00, and above the 200-day MA of 17.76, indicating a neutral trend. The MACD of -0.35 indicates Positive momentum. The RSI at 33.98 is Neutral, neither overbought nor oversold. The STOCH value of 5.15 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $35.33B | 49.06 | 18.30% | 0.05% | 20.69% | 31.56% | |
70 Outperform | $152.23B | 38.48 | 108.91% | 0.81% | 23.00% | -45.26% | |
70 Outperform | $250.64B | 32.34 | 11.79% | 1.52% | 11.84% | 24.93% | |
69 Neutral | $319.78B | 36.17 | 49.03% | 0.57% | 21.69% | 18.42% | |
64 Neutral | $50.06B | 66.64 | -16.21% | ― | ― | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $6.67B | 20.37 | 12.12% | ― | 12.56% | 144.85% |
* Industrials Sector Average
RYCEY
Rolls-Royce
18.32
3.40
22.81%
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RTX
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SARO
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20.17
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HONA
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157.94
-42.06
-21.03%
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.