It’s a giant week for Rolls-Royce (LSE:RR) shareholders. On Thursday (26 February), the flying Footsie engine maker will report its full-year 2025 outcomes.
The market seems to expect good issues, with the top off practically 15% 12 months up to now. This implies it has returned greater than 1,000% in simply three years!
Behold the share value chart, a factor of magnificence.
That will surpass final 12 months’s £1bn buyback, which Rolls topped up with one other £200m programme later within the 12 months. The brand new buyback will probably be introduced alongside the ultimate dividend, say the experiences.
Keep in mind that the corporate hadn’t launched a buyback since 2014. However now it seems to be set to have repurchased practically £3bn price by this time subsequent 12 months. This can assist trim the share rely, which ballooned throughout Covid when the agency teetered on the point of chapter.
Picture supply: Getty Photos
Issues to look out for
What different rabbits would possibly CEO Tufan Erginbilgic pull out of the hat? Properly, the dividend needs to be hiked considerably — round 50%, in keeping with my information supplier. Thoughts you, even that will nonetheless put the dividend yield at lower than 1%.
The corporate beforehand guided for an underlying working revenue between £3.1bn and £3.2bn, and an identical quantity of free money circulation. My suspicion is that the engine maker will beat these targets, however then the market already thinks this too, with the share value not far off an all-time excessive.
A determine I’ll be maintaining a tally of is massive engine flying hours. As of late 2025, they’d reached 109% of pre-pandemic (2019) ranges. Shareholders will wish to hear that is set to edge up additional.
One other factor I’ll wish to hear extra about is small modular reactors (SMRs). After being chosen as the popular bidder for the UK’s first mini-nukes, the agency’s SMR subsidiary has been busy constructing the availability chain.
A deal has been signed with Japan’s Yokogawa Electrical Company to develop the principle management system for the programme. Building administration agency Amentum has additionally been introduced in.
We must also get some commentary on the continued world provide chain challenges. If there’s any deterioration with issues right here, the share value may pull again sharply, particularly as administration has been dealing with this example deftly thus far.
Steering is vital
Now, it needs to be remembered that the inventory value will possible transfer primarily based on the 2026 outlook. Shareholders will clearly be hoping that administration guides above the present market consensus.
For context, that’s for income development of 10% (£21.7bn), and a 14% improve in earnings per share. Free money circulation is predicted to be at the very least £3.5bn for the 12 months.
Lastly, traders ought to concentrate on the inventory’s valuation right here, because the ahead price-to-earnings a number of has now crept above 40. That’s the form of valuation usually reserved for a high-growth tech inventory.
After all, there’s nothing to cease the share value exploding even greater if the numbers and steering are very sturdy. Nevertheless, with the valuation the place it’s at this time, I received’t be including to my place but.
All eyes peeled for Thursday…
