Rolls-Royce (RR.)

Business description

Rolls-Royce is a global power systems company producing gas turbines, reciprocating engines and nuclear plant for civil aircraft, defence, marine and energy. Revenues split broadly equally between original equipment (53%) and aftermarket services (47%).

Share price chart

Share chart

Stock data

Market cap.£19486.4m
Last close1033.000p
High / Low (52 weeks)1272.7p / 949.3p
Stock market listingLN
Forecast net cash (£bn)1.3
Forecast gearing ratio (%)N/A
TeamIndustrials
SectorAerospace & Defence

Price performance

%1m3m12m
Actual0.11.2(6.5)
Relative *(0.6)1.5(11.1)

* % Relative to local index

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Investment summary

H114 started with Rolls looking at a potential c £8bn acquisition of Wartsila, but has closed with a commitment to no near-term major deals. Rolls’ balance sheet now looks committed to the buy-out of Daimler’s Tognum stake (c £1.9bn), while the c £1bn proceeds from the sale of the industrial gas turbines business to Siemens is to be returned to shareholders via a buy-back. Following a forecast ‘pause’ in earnings growth in 2014, we see growth accelerating in 2016 as Trent engine deliveries pick up. We see fair value at 1,050-1,100p, with upside to this as and when Rolls can show accelerating growth and/or margin expansion towards its US peers.

Last updated on 05/08/2014

Y/E Dec Revenue (£bn) EBITDA (£bn) PBT (£bn) EPS (fd) (p) P/E (x) P/CF (x)
2012A 12.2 1.2 1.4 57.8 17.9 13.2
2013A 15.5 1.5 1.8 65.1 15.9 8.5
2014E 15.1 1.4 1.7 62.3 16.6 9.4
2015E 15.3 1.4 1.6 66.5 15.5 9.3

Last updated on 31/07/2014

Latest research

Daily comment

Institutional Comment | Aerospace & Defence | 17/07/2014

Daily comment

Institutional Comment | Aerospace & Defence | 16/07/2014

Daily comment

Institutional Comment | Aerospace & Defence | 15/07/2014

Moving to ‘risk off’

Update | Aerospace & Defence | 15/07/2014

Daily comment

Institutional Comment | Aerospace & Defence | 19/06/2014

Daily comment

Institutional Comment | Aerospace & Defence | 12/06/2014

Daily comment

Institutional Comment | Aerospace & Defence | 11/06/2014

Daily comment

Institutional Comment | Aerospace & Defence | 07/05/2014

Daily comment

Institutional Comment | Aerospace & Defence | 01/05/2014

Daily comment

Institutional Comment | Aerospace & Defence | 10/03/2014

IMS highlights opportunities

Update | Aerospace & Defence | 14/11/2013

On the shoulders of giants (ADR)

Outlook | Aerospace & Defence | 02/07/2013

Latest video

Executive Interview - Rolls-Royce

Industry outlook

Rolls' June 2014 Investor Briefing included a clear statement that the company is not looking to make major acquisitions. This lays to rest investor fears that Rolls might return to Wartsila, which could have cost $8bn+. With a very strong Trent-based civil engine growth story, Rolls is clearly focused on managing the cash costs of this, underlying operational performance, and preparing for the development of the next generation of narrow-bodied aircraft engines.

Last updated on 05/08/2014

Key management

Ian Davis, Chairman
John Rishton, CEO
Mark Morris, CFO

Company address

65 Buckingham Gate
London
SW1E 6AT
United Kingdom
+44 (0) 20 7222 9020
View website