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Rolls-Royce (RYCEY) AI Stock Analysis
Rolls-Royce
(Other OTC:RYCEY)
The company's exceptional financial turnaround and strong cash generation are the primary drivers of the score. Technical trends are supportive with the stock trading above all major moving averages. However, the high P/E ratio and slowing revenue growth present notable risks, capping the overall assessment.
Rolls-Royce (RYCEY) vs. SPDR S&P 500 ETF (SPY)
- Market Cap
- $140.25B
- Dividend Yield
- 0.87%
- Average Volume (3M)
- 1.77M
- Price to Earnings (P/E)
- 35.5
- Beta (1Y)
- 1.03
- Revenue Growth
- 23.00%
- EPS Growth
- -45.26%
- Country
- US
- Employees
- 43,162
- Sector
- Industrials
- Sector Strength
- 63
- Industry
- Aerospace & Defense
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, P...
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 arrangements...
Rolls-Royce Earnings Call Summary
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.
Q4-2025 Updates
Positive Updates
Negative 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
Strong financial recovery with four years of revenue growth, dramatically improved margins (net margin 27.5%), and robust free cash flow conversion (86%). Balance sheet has strengthened with debt reduction and positive equity, though equity remains thin and revenue growth is decelerating.
Income Statement
90Very PositiveBalance Sheet
80PositiveCash Flow
85Very 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
Price Trends
Market Momentum
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 17.19 is below the 20-day moving average (MA) of 17.53, below the 50-day MA of 18.93, and below the 200-day MA of 17.84, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 42.77 is Neutral, neither overbought nor oversold. The STOCH value of 62.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RYCEY.
Rolls-Royce Peers Comparison
Overall Rating
HONA78Outperform
HEI76.4Outperform
RYCEY73Outperform
GE71Outperform
RTX71Outperform
SARO62Neutral
Financial Indicators
| Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| 78Outperform | $48.87B | 26.37 | -221.47% | ― | 8.36% | -32.92% | |
| 76Outperform | $37.93B | 55.52 | 18.30% | 0.04% | 20.69% | 31.56% | |
| 73Outperform | $137.35B | 35.45 | 108.91% | 0.87% | 23.00% | -45.26% | |
| 71Outperform | $311.87B | 36.27 | 50.64% | 0.56% | 19.62% | 15.45% | |
| 71Outperform | $269.62B | 32.55 | 12.77% | 1.39% | 11.63% | 26.50% | |
| Sector * | 63Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
| 62Neutral | $7.74B | 25.38 | 12.12% | ― | 12.56% | 144.85% |
* Industrials Sector Average
Performance Comparison
| Show on chart | Ticker | Company Name | Price | Change | % Change |
|---|---|---|---|---|---|
| RYCEY | Rolls-Royce Holding PLC | 17.12 | 2.27 | 15.31% | |
| GE | Ge Aerospace | 315.78 | 13.21 | 4.37% | |
| HEI | HEICO Corporation | 337.59 | 21.65 | 6.85% | |
| RTX | Rtx Corporation | 202.79 | 29.75 | 17.19% | |
| SARO | StandardAero, Inc. | 25.13 | -2.37 | -8.62% | |
| HONA | Honeywell Aerospace Inc | 157.95 | -42.05 | -21.03% |
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.
Date of analysis: Aug 29, 2026