Rolls-Royce shares have surged by an impressive 120% this year, currently trading at 225p, the price they were before RR shares collapsed in 2020. Are they still on a roll or should investors sell or buy more?
Slow down
On the sell side, the CEO cautions that the pace of improvement may slow down as most non-core assets have already been divested. CEO Tufan Erginbilgiç’s turnaround strategy, featuring cost cuts and asset sales, has significantly boosted the company’s H1 2023 operating profit, marking a fivefold increase from the previous year. So this may already be priced into the market.
Speed up
Analyst sentiment is also bullish, with no sell recommendations among the 18 analysts covering the stock.
Also, the industry air travel is booming, with large engine flying hours approaching pre-pandemic levels. The civil aerospace segment’s robust 12.4% operating margin is noteworthy, and despite recent gains, the stock remains 33% below its five-year high.
However, take caution if you are thinking about buying more and increasing your RR position at the current elevated price. Maybe hold out till November, when management will unveil their strategic plans and financial targets, providing crucial insights into the company’s future.
Overall, Rolls-Royce shares look bullish, considering the company’s recent robust performance and optimistic industry outlook.
Jackson is a core part of the editorial team at GoodMoneyGuide.com.
With over 15 years industry experience as a financial analyst, he brings a wealth of knowledge and expertise to our content and readers.
Previously Jackson was the director of Stockcube Research as Head of Investors Intelligence. This pivotal role involved providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Jackson brings a huge amount of expertise in areas as diverse as global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University and has authored nearly 200 articles for GoodMoneyGuide.com.
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