FTSE 100-listed Rolls Royce Holdings PLC (GB:RR) has had a stellar 2024, marked by an impressive operational performance. The stock has surged nearly 95% year-to-date, making it one of the top performers on the FTSE 100 index. Moving ahead, the stock is poised for continued growth in 2025, backed by its earnings and cash flow guidance and analyst support. Overall, RR stock has a Strong Buy rating from analysts.
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Rolls-Royce specializes in designing engines and power systems for the aerospace and defence sectors.
Rolls-Royce Forecasts Upbeat Outlook on Business Strength
Rolls-Royce has forecast a promising outlook, driven by the strength of its key business segments.
In the Civil Aerospace, the company has seen a strong recovery in its operations, with solid demand across both business aviation and widebody sectors. The company’s large engine flying hours (EFH) have reached 102% of the levels seen in 2019 for the 10 months ending on October 31, 2024. For 2024, the company expects its EFH will range between 100% and 110% of 2019 figures. EFH is a key metric for Rolls-Royce, as it helps the company optimize its operations by tracking the usage and performance of its engines.
On the flip side, the company also highlights the supply chain challenges in the aerospace industry but remains committed to its targets.
In its Defence segment, higher spending creates a positive outlook, driving increased demand for military aircraft and naval engines. Additionally, Rolls-Royce is set to make a major contribution to the energy transition with its Small Modular Reactors (SMRs) alongside future growth platforms like the UltraFan engine.
Rolls-Royce Stays on Track with 2024 Guidance
In November, the company confirmed that it is on track to meet its 2024 guidance despite the industry-wide challenges.
For the full year, Rolls-Royce expects its underlying operating profit to be between £2.1 billion and £2.3 billion, with free cash flow ranging from £2.1 billion to £2.2 billion. In the first half of 2024, the company reported underlying operating profit of £1.15 billion and free cash flow of £1.16 billion.
Insights from TipRanks’ Bulls Say, Bears Say
TipRanks’ Bulls Say, Bears Say tool offers a summary of analyst viewpoints on RR stock, highlighting both the positive and negative outlooks. Overall, analysts maintain a highly bullish sentiment on the stock.
Bulls remain confident in the company’s ability to meet guidance, supported by strong profit and cash flow growth. Analysts are also optimistic about the strong demand in the company’s segments.
On the other hand, bears remain cautious about persistent supply chain issues in the industry and ongoing regulatory challenges.
Is RR Stock a Good Buy?
According to TipRanks, RR stock has received a Strong Buy rating based on five Buy and one Hold recommendation. The Rolls-Royce share price forecast is 661.01p, which is 13% higher than the current trading level.
