Latest update
$1,403
Updated: Jun 18, 2026, 9:42 AM UTC
Browsing public data
Rolls-Royce Holdings plc is a UK-based company specializing in mission-critical power systems across Civil Aerospace, Defence, and Power Systems segments. Its primary focus for this analysis is on its Civil Aerospace segment, which develops and services aero engines for large commercial aircraft, regional jets, and business aviation. The company demonstrates strong operating margins and profitability, alongside robust Free Cash Flow growth. While sales and cash flows are increasing, the stock's valuation has outpaced this growth. The balance sheet appears solid with manageable debt, and the company maintains a stable share count. Debt service is strong, indicating good financial health.
Free cash flow
The cash actually left in the bank after the company has paid for everything and reinvested in itself. Harder to fake than net income.
Latest
↑$3.6B
2025
The most recent reported figure, in the company's own currency and reporting cadence.
QoQ
↑+23.6%
vs 2024
How much this quarter grew compared to last quarter. Useful for spotting acceleration or slowdown in real time.
YoY
•—
How much this quarter grew compared to the same quarter one year ago. Strips out seasonality — a slow holiday quarter looks worse QoQ but normal YoY.
CAGR
•+56.8% annualised
since 2022 · 3.0y
The smooth yearly growth rate that gets you from the starting value to the current value. A 100% CAGR over 3 years means the business tripled, on average, each year.
| Metric | 3 yr | 2 yr | 1 yr |
|---|---|---|---|
| Free cash flow | +56.8% $928M→$3.6B | +42.1% $1.8B→$3.6B | +23.6% $2.9B→$3.6B |
P/E TTM
↓20.3×
Trailing twelve months. Today's price divided by the last year of actual earnings.
P/E NTM
↓32.4×
Next twelve months. Today's price divided by what analysts expect the company to earn over the coming year.
Profitability
↑Strong
Operating margin (and the wider return profile) tells you how efficiently each dollar of sales becomes profit. High and rising = pricing power; low or falling = the business is grinding.
Share count
→Stable
Are the buybacks outrunning the stock-based comp? A shrinking share count means every existing share owns a bigger slice of future earnings.
Debt load
↑Light
Total debt against cash and earnings power (EBITDA). Light debt leaves room to invest and weather downturns; heavy debt shrinks the margin for error.
Debt service
↑Strong
Whether the cash the business generates easily covers its interest and loan payments. Strong here = no forced selling in a bad year.
Cash return at today's price
→3.1%
Free cash flow divided by market cap — the cash yield you're getting for the price you pay. Above ~6% is rich, below ~3% is thin. P/E shown when the yield is too small to be useful.
Rolls-Royce has demonstrated robust price action, confirming its markup cycle. Despite being somewhat extended from its 21-day EMA, the breakout from consolidation combined with strong fundamentals and an improving macro environment for air travel supports a BUY call. The previous call's success reinforces confidence in the trend. While a pullback to the EMA would offer a better entry, the current momentum suggests pressing the advantage.
Short-term thesis
There may be a trade here, but it is not a clean long-term hold.
Long-term exposure
Avoid
The business or valuation backdrop is not ready for long-term conviction.
Entry window
Add now
The setup still offers a usable entry in this window.
Risk check
Fragile
The downside can widen quickly if this setup goes wrong.
Alignment
Mixed
Neither horizon fully wins, so size and patience matter.
What supports it
What limits it
Long-term thesis
The continued and sustained recovery of global long-haul air travel will drive increasing flight hours and engine maintenance demand, directly translating into higher earnings for critical widebody engine providers like Rolls-Royce through its service model.
Bottleneck Role
Rolls-Royce is a critical widebody engine provider with a high-margin 'power-by-the-hour' service moat. There are high barriers to entry, long replacement cycles, and few competitors in this segment.
Consensus Blind Spot
The market is underestimating the durability and accelerating impact of Rolls-Royce's 'power-by-the-hour' service model in the context of a sustained, multi-year recovery in global long-haul air travel. Traditional P/E ratios might not fully capture the quality and predictability of future cash flows derived from this operational leverage.
Demand Gap
There is a growing demand-supply imbalance for high-quality, reliable widebody aircraft engines and their associated long-term maintenance, driven by the strong recovery in global long-haul air travel, which has surpassed prior expectations.
Demand to Equity Scenarios
Faster-than-expected recovery in long-haul international travel and cargo flights, coupled with new widebody aircraft orders.
Demand
—
Earnings
+25%
Equity implication
+30%
Increased engine utilization and new engine sales drive robust service and equipment revenue.
Steady recovery in air travel to pre-pandemic levels by 2025-2026, consistent widebody aircraft demand, and stable flight hour growth.
Demand
—
Earnings
+15%
Equity implication
+20%
Consistent growth in flight hours translates to predictable service revenue, augmented by stable new engine deliveries.
Economic downturn or new geopolitical events significantly curtailing global air travel, leading to reduced flight hours and deferred aircraft orders.
Demand
—
Earnings
-10%
Equity implication
-15%
Lower flight hours reduce service revenue; deferred orders impact equipment sales, leading to earnings contraction.
Dependency Chain
Repricing Triggers
Must be true
Thesis broken if
What changed
Signal
Conviction
Long term
Stock
Added since last run
9No longer flagged
0Nothing dropped this run
My prior reasoning that prices would resume their upward trend after consolidation was correct, as the stock moved +13.7% in the predicted direction.
Jun 18, 2026
LatestUpdated Jun 18, 2026, 9:42 AM UTC
Price at review
$1,403
The stock has shown strong upward momentum, breaking out of a healthy consolidation phase. While slightly extended from intermediate moving averages, the underlying demand trends and continued strong fundamentals suggest further upside. Expect prices to continue their march higher this week, potentially testing new highs as the market recognizes the ongoing recovery and Rolls-Royce's integral role.
Jun 11, 2026
Updated Jun 11, 2026, 12:58 AM UTC
Price at review
$1,234
Expect prices to resume their upward trend as the stock completes its healthy consolidation around the breakout level.
Jun 3, 2026
Updated Jun 3, 2026, 10:22 PM UTC
Price at review
$1,258
Expect prices to stabilize and resume their climb as the stock completes its current healthy pause.
May 27, 2026
Updated May 27, 2026, 7:34 AM UTC
Price at review
$1,269
The stock has broken out of its sideways range and is showing strong upward momentum. Conditions look very favorable for joining the move now.
May 13, 2026
Updated May 13, 2026, 5:39 PM UTC
Price at review
$1,205
The stock is attempting to stabilize near key levels but lacks the forceful buying needed for a new entry. Waiting for a clear break back above the recent price ceiling is the safest path.
May 1, 2026
Updated May 1, 2026, 10:02 AM UTC
Price at review
$1,173
The bounce off support with heavy volume is encouraging, but price is still stuck below key resistance and the overall trend remains down. This is not yet a clean setup for new money.