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Rolls-Royce Holdings logo

Rolls-Royce Holdings

RYCEF
65
Aerospace & Defense · Industrials
Price
$17.90
-0.77 (-4.11%)
Market Cap
$148.22B
Exchange
Other OTC
Winston Score
65
Winston is curious
A decent business — some strong pillars, some weaker.

Share count rising — dilution

+1.1% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 8.35B (2021) → 8.45B (2025)

Rolls-Royce Holdings makes engines for large commercial airplanes, military jets, and naval ships. It also builds small nuclear reactors and power systems for submarines. Its main customers are airlines, defense ministries, and governments — particularly in the UK, US, and Europe. The company is one of only three major makers of large commercial jet engines in the world, alongside GE and Pratt & Whitney.

Most of its money comes from long-term service contracts, not just selling engines. Airlines pay Rolls-Royce over many years to maintain and repair the engines they install on planes — a model called "power by the hour." The company operates globally, with especially strong ties to the UK government and military. Its biggest growth driver is the recovery in long-haul air travel, which increases flying hours and boosts service revenue. The main risk is that its engines are concentrated on wide-body jets, so any slowdown in long-haul aviation directly hurts results.

Winston Score History

Growth Profile

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+16.6% YoY

YoY Growth Rate

Steady revenue growth

EPS Growth

+6.3% YoY

YoY Growth Rate

Slow EPS growth

R&D Spend

$394M/ year

Rising (+94% vs prior year)

1.9% of revenue

Below sector average (4%)

R&D investment increasing — building for the future

Insider Activity

1.2%ownership

Relatively low insider ownership

Cash Position

Cash flow positive

$8.8B cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

Company generates more cash than it spends — no dilution risk from fundraising

Growth + cash flow

Rolls-Royce Holdings is a rare growth stock that's already generating positive cash flow while growing at 17%. The Winston Score doesn't fully credit this transition from "burner" to "earner."

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin
27.4%
Modest — 27.4% gross margin
Operating Margin
27.7%
Excellent — 27.7% operating margin
ROCE
58.7%
Exceptional — 58.7% return on capital

ROIC above 25%. Every dollar invested in the business earns more than 25 cents back per year.

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Growth

Sales YoY
+33.7%
Fast-growing sales (33.7% YoY)
EPS YoY
+554.3%
Earnings growing fast (554.3% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency
8/8 quarters
Every recent quarter grew earnings vs last year

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Cash Flow

Cash Conversion
99%
Turns 99% of profit into real cash
FCF Margin
16.8%
Converts sales into free cash efficiently (16.8%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity
1.03
Elevated debt (1.03)
Interest Cover
14.38x
Comfortably covers interest (14.4x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)
18.1x
Fair value — P/E 18.1

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward
-21.0
SLOWING
Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield
0.63%
Small dividend — 0.63% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth
-13.8%
Dividend cut (-13.8% YoY) — warning sign

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