Rolls-Royce Holdings PLC
🇬🇧 RR.LSE · London · GB00B63H8491
Industrials
GBX 1188.50 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
17.2
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 1188.50 ÷ 69.14 = 17.2
TTM period through: 2025-12-31
Forward P/E (estimated): 28.4
Based on analyst estimates
Reference: Provider P/E (Trailing): 17.2
Yield (Fwd)
0.84%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 0.79%
Net Debt/EBITDA (TTM)
-0.3x
Latest quarter: -0.5x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): -0.5x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
14.5%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 15.2%
Cash Flow Payout (TTM): 20.2%
FCF Coverage (TTM): 4.25x
ROE
62.4%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
12.1x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Rolls-Royce is a leading global aerospace and defense manufacturer with a dominant duopoly position in wide-body aircraft engines. While management has executed a remarkable financial turnaround resulting in strong free cash flow and a net cash balance, the negligible 0.79% dividend yield makes this unsuitable for conservative dividend strategies. Better opportunities exist in more stable, essential service sectors offering reliable yields.
Sector Context
Rolls-Royce designs, manufactures, and services mission-critical power systems for the civil aerospace, defense, and power systems markets. While the company enjoys strong barriers to entry and long-term service contracts, the aerospace industry is highly cyclical and vulnerable to geopolitical shocks, making it inherently challenging for generating the stable, uninterrupted dividends favored by conservative income strategies.
📊 Strategy Analysis
- • Management has executed a successful financial turnaround, achieving a Net Debt/EBITDA of -0.32x and restoring strong profitability with an EBITDA margin of 28.9%.
- • The company benefits from a robust competitive moat, operating in a highly consolidated duopoly for wide-body aircraft engines.
⚠ What to Watch
- • The current dividend yield of 0.79% falls drastically short of the strategy's strict >3% minimum requirement for income generation.
- • Trading at a P/E of 17.19, the valuation exceeds the preferred 8-15x target range, reflecting growth expectations rather than an attractive value entry point.
- • A history of severe dividend cuts and complete suspensions between 2017 and 2022 underscores structural income unreliability during cyclical downturns.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-05
Disclaimer: This information is for educational purposes only. Not financial advice.