top of page

Rolls-Royce Stock Analysis



โœˆ๏ธ Rolls Royce is the ๐™จ๐™š๐™˜๐™ค๐™ฃ๐™™ ๐™ก๐™–๐™ง๐™œ๐™š๐™จ๐™ฉ ๐™–๐™ž๐™ง๐™˜๐™ง๐™–๐™›๐™ฉ ๐™š๐™ฃ๐™œ๐™ž๐™ฃ๐™š ๐™ข๐™–๐™ฃ๐™ช๐™›๐™–๐™˜๐™ฉ๐™ช๐™ง๐™š๐™ง ๐™ž๐™ฃ ๐™ฉ๐™๐™š ๐™ฌ๐™ค๐™ง๐™ก๐™™ after GE Aviation $GE . The company focuses mostly on widebody aircraft with Airbus $AIR.PA being their largest customer ahead of Boeing $BA . Rolls-Royce is also a defence contractor and manufactures power systems both for civilian and military applications.


๐Ÿฆ  Rolls-Royce $RR.L is down more than 70% from all time high. The airline and aerospace industries have been hit by this pandemic but when we look at Rolls-Royce, we will see that the problems started since 2015. There were uncertainties around Brexit since their largest customer is Airbus. They have big pension liabilities. They took more debt and diluted their shares. The market didn't like it. The pandemic made things worse as the demand for new planes is now very low.


โœˆ๏ธ ๐˜ฝ๐™ช๐™จ๐™ž๐™ฃ๐™š๐™จ๐™จ ๐˜ฟ๐™š๐™จ๐™˜๐™ง๐™ž๐™ฅ๐™ฉ๐™ž๐™ค๐™ฃ:

Rolls Royce has 3 main business segments: Civil aerospace, power systems and defence.

Civil Aerospace business accounted for 51% of revenues in FY19 and 41% in FY20. The Industry was hit by Pandemic in 2020, causing a 37% drop in revenues in Civil Aerospace business segment. Rolls Royce has 55% of market share of widebody order book as of 2019 with 43% of market share in 0-10 years old widebody and 12% in 20-30 years widebody. Typical widebody retirement window is 25 years. Therefore, we can say that for the long-term, the market is here for Rolls Royce but right now, airlines are not really in the position to buy new planes.

๐Ÿš€ ๐˜ฟ๐™š๐™›๐™š๐™ฃ๐™˜๐™š is a safer and more stable business, so is power system but the real growth engine of this business is civil aviation.


๐Ÿ’ต๐™๐™ž๐™ฃ๐™–๐™ฃ๐™˜๐™ž๐™–๐™ก ๐˜ผ๐™ฃ๐™–๐™ก๐™ฎ๐™จ๐™ž๐™จ:

โ€ข Revenues of GBP 11.8 Billion in FY20 down from GBP 16.5 Billion in FY19

โ€ข Operating loss of GBP 2.27 Billion in FY20 vs loss of GBP 956 million for

FY19

โ€ข Net loss of GBP 3.17 Billion in FY20 vs net loss of GBP 1.31 Billion for FY19

โ€ข Negative Free Cash Outflow of GBP 4.2 Billion in FY20 vs FCF GBP 873

million for FY19

โ€ข Total assets: GBP 29.5 Billion ; total liabilities: GBP 34.4 Billion; book value:

Negative GBP 4.9 Billion

โ€ข Cash: GBP 3.3 Billion, debts: GBP 4.2 Billion, current assets: GBP 14.6

Billion, current liabilities: GBP 13.9 Billion

โ€ข 6.3 Billion shares outstanding vs 5.9 Billion in FY19

โ€ข GBP 2.0 Billion may be raised by issuing new shares


๐Ÿ’ฐ๐™‘๐™–๐™ก๐™ช๐™–๐™ฉ๐™ž๐™ค๐™ฃ ๐™–๐™ฃ๐™™ ๐˜พ๐™ค๐™ฃ๐™˜๐™ก๐™ช๐™จ๐™ž๐™ค๐™ฃ:

My analysis shows that the company is overvalued since we need a big margin of safety to account for all the uncertainties surrounding the airline and civil aerospace industries during this recovery from the pandemic.


Watch the full video on YouTube:

https://www.youtube.com/watch?v=nX0tZR7ALKw&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1


Full analysis of Rolls Royce:

https://ishfaaqpeerally.teachable.com/courses/662813/lectures/31413477


ย 

๐Ÿ”ฌJoin my INVESTMENT RESEARCH PARTNERSHIP for all my analysis and research, along with a course for investing for beginners for free๐Ÿ”ฌ

https://ishfaaqpeerally.teachable.com


๐Ÿ“š New to investing? Here's my investing COURSE FOR BEGINNERS with over 150 lectures ๐Ÿ“š

https://ishfaaqpeerally.teachable.com/courses/enrolled/721696


๐Ÿ—ฃ๏ธJoin my private investing FACEBOOK GROUP for more ๐Ÿ—ฃ๏ธ

https://www.facebook.com/groups/IshfaaqInvesting/


๐Ÿ’ฌ Join my DISCORD CHAT ๐Ÿ’ฌ:

https://discord.com/invite/t9YvXfU


๐ŸŒ WEBSITE - Subscribe for Weekly Newsletter ๐ŸŒ:

https://www.ishfaaqpeerally.com/


10 views0 comments

Recent Posts

See All
bottom of page