Rolls-Royce Holdings PLC (RR)

Rolls-Royce Holdings Plc Overview

Founded in 1906, Rolls-Royce Holdings Plc (LSE; ticker: RR) is a multinational organisation committed to delivering excellence across three core operations: ‘Civil Aerospace’, ‘Defence’, and ‘Power Systems’.

• The ‘Civil Aerospace’ division is broken down into four segments consisting of ‘large engines’, ‘business aviation’, ‘regional’, and ‘V2500’, and focusses on manufacturing aero engines for business aviation, regional jets, and commercial aircrafts.
• The ‘Defence’ division provides aero engines for military and patrol aircrafts and is categorised into five distinct segments: ‘Transport’, ‘Combat’, ‘Submarines’, ‘Naval’, and ‘Helicopters’.
• The company’s ‘Power Systems’ division is one of the world’s leading onsite power generation and propulsion providers. Rolls-Royce controls approximately 20% of the global market share (30% across governmental departments: ‘land defence’ and ‘naval’).

Headquartered in the United Kingdom (UK), London, Rolls-Royce has a strong international presence spanning over 40 countries, with customers in more than 150 countries. Employing over 50,000 people, and having a market value of more than £50 billion, a global revenue of £16 billion and an international order book standing at over £78 billion, the company is considered one of the world’s leading aerospace companies.

Why Trade Rolls-Royce Holdings Plc Shares?

Between 2023 and 2024, the RR Stock rallied an impressive 500%, with the Share price up 8% so far this year. As February refreshes all-time highs of GBX649.8 and price action depicts an uptrend, chart studies suggest that this remains a buyers’ market for now, and corrections are likely to be bought into.

Rolls-Royce’s year-on-year (YY) Share price growth will have pleased investors, but is it a Stock worthy of consideration at current levels? The trend is evident from a technical point of view, and corrections will likely be viewed as buying opportunities. The company also possesses a diverse portfolio, with its Defence division likely to benefit from the strong possibility of increased defence spending, particularly across Europe. Rolls-Royce also recently signed a £9 billion, eight-year defence contract with the UK Ministry of Defence – the largest in the company’s history.

While there is a lot of optimism surrounding the Stock’s future, not everyone is bullish. Analysts at Citi recently revised their forecast from a ‘Buy’ to ‘Neutral’. In addition to this, the Stock’s valuation is considered high by some investors.

What Influences the Price of RR?

The Stock market is influenced by a number of factors, with the earnings season generally taking precedence. Corporate earnings results can have a marked impact on the value of a company’s Share price, with volatility often increasing considerably if/when earnings deviate from market consensus. Investors will pay close attention to the company’s financial performance, tracking metrics like revenue, income, and debt levels.

Economic performance can also influence investors’ views of the RR Stock and the Stock market in general. When the economy is moving in the right direction – low unemployment, stable prices, and growth – investor appetite is usually higher. However, it is crucial to understand that different sectors outperform/underperform during various business cycle stages. Geopolitical events such as international trade tensions might also indirectly influence the Stock market.

News flow can also have a considerable influence on the RR Stock. This could range from news of a macroeconomic nature – such as the latest employment figures in the country or from particular industries – to news that no one saw coming concerning the company, such as comments from officials in media interviews. The point is that this news flow can increase/dent investor confidence and, by extension, affect the supply and demand of a specific Stock.

More specific to Rolls-Royce, investors will likely track industry developments; this may include aircraft demand, the profitability of airlines, and trends within aviation technology. Competition among the company’s peers might also need to be monitored closely.

How To Trade Rolls-Royce Holdings Plc (RR) CFDs?

While Rolls-Royce is a Stock that may appeal to trend followers, and although the company offers a lot to be positive about, generating an investment decision is usually based on individual research consisting of technical and fundamental analysis. The FP Markets Academy can help new Stock investors learn how to trade Share CFDs (Contracts for Differences) through in-depth articles and video guides.

CFDs are unique investment derivative products that allow investors to speculate and hedge across various markets, including individual Stocks, such as RR, Stock Indices, Currencies (Forex), Bonds, Commodities, and more. A CFD contract is formed between two parties – a buyer with a ‘long’ bias and a seller with a ‘short’ bias – who agree to exchange the difference between a trade's opening and closing price (based on the underlying asset’s price movement). A CFD contract is also always a cash-settled transaction, unlike futures and options contracts, which can provide a means of physical settlement. Nevertheless, one of the defining features of a CFD position is the leverage that is offered, enabling investors to increase their position size beyond their available funds.