Rolls-Royce Holdings (RR) AI Stock Analysis

• Market Cap: $58.82B
• Dividend Yield: N/A
• Average Volume (3M): 33.87M
• Price to Earnings (P/E): 23.3
• Beta (1Y): 1.28
• Revenue Growth: 14.70%
• EPS Growth: 3.76%
• Country: UK
• Employees: 42,400
• Sector: Industrials
• Sector Strength: 70
• Industry: Aerospace & Defense
• EPS (TTM): 0.30
• Shares Outstanding: 8,478,331,000
• 10 Day Avg. Volume: 40,453,025
• 30 Day Avg. Volume: 33,873,814
• PEG Ratio: 6.19
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.82
• Price to Cash Flow (P/CF): 20.40
• P/FCF Ratio: 22.40
• 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: 771.69p
• Price Target Upside: 11.23% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

Rolls-Royce Holdings shows strong financial performance in terms of revenue and cash flow growth, boosting its stock score. However, significant balance sheet challenges with negative equity and high debt levels pose risks to financial stability. Positive technical indicators suggest strong market momentum, while the valuation remains modestly appealing without a dividend yield.

Positive Factors

Earnings and Guidance

FY24 results are a beat, FY25 guidance is ahead and implies the 2027 CMD targets being achieved two years earlier than planned.

Share Buyback

A £1bn share buyback programme has been launched, demonstrating confidence in the outlook and a strong commitment to shareholder returns.

Negative Factors

Certification Delays

FAA certification of the Trent 1000 TEN HPT blade now expected in the 'coming months', a slight softening of the message compared to previous guidance of year-end.

Supply Chain Challenges

The supply chain environment is still said to be challenging.

Rolls-Royce Holdings 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 Holdings generates revenue through a diversified business model focused on the sale and maintenance of power systems across various industries. In the civil aerospace sector, the company earns from the sale of jet engines for commercial aircraft and long-term service agreements, which provide a steady stream of income through maintenance, repair, and overhaul services. The defense sector contributes by supplying engines and related services for military aircraft, naval vessels, and submarines. In the power systems segment, Rolls-Royce offers engines and power generation equipment for use in marine, industrial, and energy sectors. Additionally, the company is actively exploring new markets, including sustainable energy solutions and digital technologies, to drive future growth. Strategic partnerships and collaborations also play a significant role in expanding its market reach and technological capabilities.

Rolls-Royce Holdings Financial Statement Overview

Summary

Rolls-Royce Holdings exhibits strong revenue and profit growth with improved cash flow metrics, highlighting effective operational performance. Nonetheless, the company faces significant balance sheet challenges with negative equity and high debt levels, posing potential financial stability risks that need to be addressed.

Income Statement

Rolls-Royce Holdings has demonstrated strong revenue growth with a 14.7% increase in 2024 compared to 2023. The gross profit margin improved to 22.3% in 2024 from 22.0% in 2023, indicating effective cost management. The company's net profit margin also increased to 13.3% in 2024. However, the EBITDA margin slightly decreased from 22.7% in 2023 to 18.4% in 2024, which suggests a need to control operating expenses further.

Balance Sheet

The balance sheet shows a significant challenge with negative stockholders' equity at -$912 million. This indicates that liabilities exceed assets, which could be a concern for financial stability. The debt-to-equity ratio cannot be calculated due to negative equity, but the overall high level of debt relative to assets remains a concern. The equity ratio is also negative, suggesting potential financial instability.

Cash Flow

Rolls-Royce's free cash flow grew by 63.3% in 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio improved to 1.50, showing efficient conversion of income to cash. However, the high free cash flow to net income ratio suggests reliance on non-operating sources of cash flow, which may not be sustainable long-term.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
17.82B	18.91B	16.49B	13.52B	11.22B	11.82B
	Gross Profit
4.10B	4.22B	3.62B	2.76B	2.14B	-210.00M
	EBIT
2.31B	2.91B	1.94B	339.00M	513.00M	-2.08B
	EBITDA
2.63B	3.48B	3.74B	1.29B	996.00M	-166.00M
	Net Income Common Stockholders
2.33B	2.52B	2.41B	-1.19B	120.00M	-3.17B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.00B	5.36B	3.52B	2.40B	2.55B	3.42B
	Total Assets
31.86B	35.69B	31.51B	29.45B	28.67B	29.52B
	Total Debt
4.66B	5.13B	5.76B	5.96B	7.78B	7.33B
	Net Debt
-312.00M	-195.00M	2.25B	3.58B	5.24B	4.02B
	Total Liabilities
32.91B	36.57B	35.14B	35.47B	33.31B	34.39B
	Stockholders Equity
-1.07B	-912.00M	-3.68B	-6.05B	-4.66B	-4.90B
Cash Flow		Free Cash Flow
2.63B	2.90B	1.77B	1.49B	-587.00M	-3.59B
	Operating Cash Flow
3.02B	3.78B	2.48B	1.85B	-259.00M	-3.01B
	Investing Cash Flow
-753.00M	-831.00M	-726.00M	826.00M	-428.00M	-1.01B
	Financing Cash Flow
-765.00M	-1.05B	-549.00M	-2.87B	-88.00M	3.02B

Rolls-Royce Holdings Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 693.80
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RR, the sentiment is Neutral. The current price of 693.8 is below the 20-day moving average (MA) of 751.98, below the 50-day MA of 708.52, and above the 200-day MA of 572.88, indicating a neutral trend. The MACD of 23.36 indicates Positive momentum. The RSI at 55.89 is Neutral, neither overbought nor oversold. The STOCH value of 25.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:RR.

Rolls-Royce Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SMIN	75 Outperform	£5.94B	19.94	13.99%	2.46%	6.10%	33.05%
RR	72 Outperform	$58.82B	23.25		―	14.70%	3.76%
Sector *	62 Neutral	$7.62B	13.01	3.19%	3.32%	3.77%	-14.28%