Rolls-Royce Holdings PLC (RR) fair value: what the stock is really worth
As of Oct 26, 2026: fair value (intrinsic value) of Rolls-Royce Holdings PLC stock £9.01, price £12.35, upside -27.0%, quality 76 out of 100. Rating: overvalued. Calculated from audited financials with 26 valuation models and 37 quality factors, updated daily.
Fair value above price?No
Good quality?Yes
Keep an eye on it?Free in your watchlist: 5 stocks without an account, 10 with oneYes, for free
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Price vs Fair Value
White line = price, green steps = our fair value per fiscal year, dashed = 300-day average. As of Oct 25, 2026.
How to read this chart
60‑month range £0.6488 – £15.64 · fair‑value band £6.00 – £12.38 · the £12.35 price screens above the £9.01 fair value. Green steps = our fair value per fiscal year (point-in-time, no hindsight). Dashed = 300-day average. As of Oct 25, 2026.
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Rolls-Royce Holdings plc designs and manages mission-critical power systems in the United Kingdom and internationally. The company operates through three segments: Civil Aerospace, Defence, and Power Systems.
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The Civil Aerospace segment develops, manufactures, markets, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services.
The Defence segment is involved in the development, manufacture, marketing, and sale of military aero engines, naval engines, and submarine nuclear power plants, as well as offers aftermarket services.
The Power Systems segment engages in the development, manufacture, marketing, and sale of integrated solutions for onsite power and propulsion under the mtu brand name. Rolls-Royce Holdings plc was founded in 1884 and is headquartered in London, the United Kingdom.
Stock analysis
Rolls-Royce Holdings PLC (RR) currently trades at £12.35, while our model-based Fair Value estimate is £9.01, 27.0% below the price, so the stock looks overvalued today.
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Valuation
Bull case: the Growth Earnings group reads highest at a median of £13.37 per share, and 5 of the 24 models we run sit above the £12.35 price.
Bear case: the Economic Profit group reads lowest at £1.20, and 19 of the 24 models stay below the price. Data coverage for this calculation is high.
Scenario range: £6.00 (bear) to £12.38 (bull), the price of £12.35 sits inside it. Bear and bull are the same models on cautious and optimistic assumptions, a range, not a price target.
Quality & growth
The Quality Score stands at 76/100 (high quality), in the Industrials sector.
Healthy Growth: Revenue growth appears healthy and is supported by profitability and cash-flow quality.
Rolls-Royce Holdings PLC reported revenue of £21.2B in FY2025 versus £11.2B in FY2021, a compound +17.3%/yr. Reported net income was £5.8B in FY2025, compounding +164.1%/yr from FY2021. FY2021 was a trough year, so the rate overstates the trend.
Key figures
Market cap £103B Large · P/E ratio 34.3 · P/S ratio 4.46 · EPS (TTM) £0.3600 · Dividend yield 0.9% · Net margin 13.1% · Return on equity 114% · Return on assets (EBIT) 6.5%.
Competitive moat
Our AI-assisted moat analysis scores the competitive advantage at 82 out of 100 (medium confidence).
What moves the price
The share trades about 21% below its 52-week high and 21% above its 52-week low, currently below its 200-day average.
For context, the median of 10 Industrials peers we cover trades at −25% fair-value upside, at −27%, RR screens richer than that median.
Fair Value models
Bear£6.00Fair Value £9.01Bull£12.38
Price £12.35 · Upside -27.0%
Model ⓘEach model values the company its own way (discounted cash flow, earnings, assets, dividends). The fair value above starts from their evidence-weighted blend, not from a single model. In cyclical trough or peak years, after dilution or a stock split it is adjusted afterwards, so it can sit above or below the models. Based on fiscal year 2025 figures (about 10 months old). Earnings retained since then (£0.2048 per share) are deliberately not added.Bear ⓘBear = the cautious scenario: the same model computed with conservative anchors (lower growth, margins and valuation multiples). Together with Bull it frames a plausible valuation range, not a price target.BaseBull ⓘBull = the optimistic scenario: the same model computed with favourable anchors (higher growth, margins and valuation multiples). Together with Bear it frames a plausible valuation range, not a price target. If a model's bull case is above four times its base value, the table shows that limit with a > sign (like the overall Bull above): beyond it no assumption holds.Coverage ⓘCoverage = how well-backed THIS model's estimate is for this stock (0–100): how complete and reliable its input data are, and how well the model fits the company. The final Fair Value is an evidence-weighted blend, so better-evidenced models count more. Green ≥70, amber 50–69, grey below 50.
Growth Quality ⓘGrowth is valuable only when reinvestment earns attractive returns (Aswath Damodaran): sustainable growth depends on return on capital, reinvestment and efficiency. Basis: total company revenue over the periods shown on the cards (3Y/5Y/all years), not per share, so a merger can show up as a growth jump; per-share earnings growth is in the value-creation card.98/100
Revenue growth appears healthy and is supported by profitability and cash-flow quality.
Revenue growth 1 year
+12.2%
Revenue growth 3 years ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+16.2%
Revenue growth 5 years ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+13.0%
Start year 2020 (pandemic). Over 10 years: +4.4% a year
Revenue growth 40 years ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+6.7%
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What shareholders gained per year (last 3 years) (mathematically smoothed) ⓘWhat the business itself delivers per year: earnings growth per share plus the dividend yield. This is what you get IF the market keeps valuing the stock the same way: it contains no assumption about the market changing its mind. Computed per share, so buybacks count and a merger does not pass as growth. For a company that pays no dividend it is pure earnings growth per share. Period: earnings growth per share as CAGR over the last 3 reported fiscal years (annual statements), plus the current dividend yield. The start value is the median of the three years around the start, so a single crisis year (a pandemic or a write-down) does not distort the rate. Smoothed = median of all growth paths between the years of the window (trend line on the logarithm of earnings per share): a single extreme year cannot distort the rate. The reported figure stays in the tooltip.
+56.1%
Earnings growth per share plus dividend.
Earnings per share, growth per year+55.2%
Dividend (yield on the price)0.9%
Profit margin 2020 to 2025 ⓘOperating margin then vs now, from reported annual statements. A falling margin after a boom year is the classic peak-earnings signal: the growth rate then leans on an inflated base.−17% → 25%
2025 sits 136% above its own trend. The rate follows the median trend of the last 3 years, not that single year.
⚠ Revenue per share shrinking 1.3%/yr over ~10Y (margins intact) ⓘStructural-decline marker: revenue PER SHARE has fallen over the last decade (robust median trend, not a single year). Backtested across 2005 to 2017, such businesses trailed the market by about 2.5 percentage points per year. Display only: it does not change the fair value or the quality score.
Growth Forecast
A lot of optimism in the price
The price assumes more growth than the company has delivered so far and more than analysts expect.
What the price assumes ⓘThis turns our valuation around: instead of asking what the share is worth, it asks what growth the current price requires. It uses the cash the company keeps after all spending (free cash flow), the same discount rate as our models, five years of growth, then slowing evenly to 2 % a year by year ten. Compared with the analysts' sales forecasts extended to the same five years (at least three analysts, for context only, it does not enter the Fair Value): within 3 percentage points counts as "in line" (amber), below that little optimism (green), above that a lot of optimism (red).
+16.7%
Yearly growth needed for the next five years to justify today's price.
What forecasts expect ⓘAnalysts publish sales forecasts for the next two fiscal years. For the years after that, growth slows evenly to 2 % a year by year ten (2 % is the long-run rate our models use). Projected years are marked as such.
+9.8%
Yearly sales growth analysts expect, extended to five years.
After inflation (UK: IMF forecast 2.3% a year to 2030, 3.3% from 2016 to 2025) that is about +14.0% a year for the price and +7.3% for the forecasts.
AI conclusion: Moderate durable advantage from tech intensity and aftermarket economics in aerospace forms the main strength, while limited public signals on governance and insider alignment represent the primary weakness.
Main risk: GE Aerospace's exclusive supply deals with Boeing for widebody aircraft could reduce Rolls-Royce's engine orders and pressure margins in its core civil aerospace segment.
Bull case: Rolls-Royce could leverage its aftermarket strength and hydrogen engine development to gain share in sustainable aviation and offset competitive pressures from rivals.
Bear case: If GE Aerospace further entrenches its Boeing ties and regulatory demands accelerate, Rolls-Royce might lose significant widebody orders and face higher costs that erode its aerospace margins.
Rolls-Royce directors have acquired shares through employee plans while the company repurchases millions more under its multi-billion pound buyback programme. At the same time it is licensing local production of marine engines in Saudi Arabia and directing hundreds of millions into new and upgraded UK facilities. Will the incremental profits from these growth moves exceed what further share reductions could deliver?
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Peer GroupⓘHow this stock ranks against its industry: the green marker is this stock, the band is the typical 25–75% peer range, and the tick is the median.Aerospace & Defense · 235 stocks
Beats the industry median on 9/14 measures
Overall it ranks above its industry peers.
Valuation
Quality Score76 · Top 25%
Fair Value upside−27.0% · Above median
Profitability
Return on equity (12 months)114.5% · Top 25%
Return on assets15.3% · Top 25%
Net margin (12 months)13.1% · Above median
Operating margin (12 months)21.1% · Top 25%
Growth and dividend
Revenue growth (quarter YoY)20.6% · Above median
Dividend yield (12 months)0.9% · Above median
Balance sheet
Debt / equity0.65× · Highest 25%
Valuation Multiplesvs Aerospace & Defense median · lower = cheaper
P/E (12 months)34.3× · Pricier than median
P/B37.90× · book value is mostly goodwill ⓘGoodwill and other intangible assets are larger than the equity. The book value mainly reflects prices paid for past acquisitions, so we do not rank this P/B against the peer group.
P/S (12 months)4.46× · Pricier than median
Price / free cash flow27.5× · Cheaper than median
EV/EBITDA19.4× · Pricier than median
PEG2.27× · Priciest 25%
Strength profile in five axes (Snowflake)
This stockSector peers
VALUE (fair-value potential)0· sector 0
FUTURE (revenue growth)100· sector 59
PAST (return on equity)100· sector 39
HEALTH (low debt)68· sector 94
DIVIDEND (yield)18· sector 18
VALUE 0: the price sits above our fair-value range.
For bloggers, editors and developers: paste this into your site or blog (a “Custom HTML” block in WordPress), it shows the current fair value and links back here. Free, plain HTML, and welcome. Full data streams (CSV/JSON) at /developers.
Is Rolls-Royce Holdings PLC (RR) overvalued or undervalued?
As of Oct 25, 2026, our model estimates a fair value of £9.01 versus a price of £12.35, about −27% upside (overvalued).
What is the fair value of RR?
Our model-based fair value for Rolls-Royce Holdings PLC is £9.01 (as of Oct 25, 2026), built from audited fundamentals. The current price: £12.35.
What is the quality score of RR?
Rolls-Royce Holdings PLC has a Quality Score of 76/100. It measures business quality (profitability, growth, cash flow, balance-sheet strength, investment discipline, share issuance). Market factors such as price momentum and volatility do not enter the number; they are shown separately in the detail view.
What is the price target for Rolls-Royce Holdings PLC (RR)?
Our model-based price target is the fair value of £9.01 (as of Oct 25, 2026) from 24 valuation models. Cautious scenario £6.00, optimistic scenario £12.38. It is a calculation from audited fundamentals, not an analyst target.
What is the Rolls-Royce Holdings PLC stock forecast for 2026?
Our models put fair value at £9.01, about −27% upside versus a price of £12.35 (overvalued). Cautious scenario £6.00, optimistic scenario £12.38. The calculation is refreshed regularly with new filings.
What is the revenue of Rolls-Royce Holdings PLC (RR)?
Rolls-Royce Holdings PLC reported trailing-twelve-month revenue of about £23.2B (latest available figure, as of Oct 25, 2026).
Does Rolls-Royce Holdings PLC pay a dividend?
Rolls-Royce Holdings PLC currently shows a dividend yield of 0.89% relative to its recent price (as of Oct 25, 2026).
What growth is priced into Rolls-Royce Holdings PLC (RR)?
For today's price to be fair in a discounted-cash-flow model, Rolls-Royce Holdings PLC would have to grow free cash flow by +16.7 % per year for five years (discount rate 10.5 %, then slowing evenly to 2 % perpetual growth by year ten). Over the last 5 years revenue grew +13.0 % per year. As of Oct 25, 2026.
What discount rate (WACC) does the fair value of RR use?
Our models discount Rolls-Royce Holdings PLC at 10.5 %: a base by market capitalisation (large), damped by beta 1.27, country premium for United Kingdom. The same rate applies in all 26 models.
What is a reverse DCF?
A reverse DCF turns the usual calculation around. Instead of deriving a value from assumptions, it takes today's price as given and asks: what free-cash-flow growth would a company have to deliver for exactly this price to be fair? The result is not a forecast but the expectation already priced in. For Rolls-Royce Holdings PLC that is +16.7 % per year a year over ten years, using the same discount rate (10.5 %) and the same formula as our fair value.
How much growth has Rolls-Royce Holdings PLC (RR) delivered so far?
Over the past 5 years revenue at Rolls-Royce Holdings PLC grew +13.0 % a year. The price currently implies +16.7 % per year free-cash-flow growth a year. Comparing the two shows how much confidence is in the price: if it demands more than has been delivered, the business has to accelerate for the maths to work.
How fast is the sector of Rolls-Royce Holdings PLC (RR) growing?
The median revenue growth in the sector is +7.6 % a year. That is the yardstick for the growth priced into Rolls-Royce Holdings PLC (+16.7 % per year a year): it shows whether the expectation is within the usual range or beyond it.
What is the free cash flow yield of Rolls-Royce Holdings PLC (RR)?
The free-cash-flow yield on the price is 3.64 %: that much free cash flow Rolls-Royce Holdings PLC produces per unit of market value. When it exceeds the discount rate of our models (10.5 %), the business already earns more than its cost of capital demands, and the price needs little additional growth.
What is the intrinsic value of Rolls-Royce Holdings PLC (RR)?
Intrinsic value and fair value mean the same thing: what the business is worth on its numbers, independent of the share price. For Rolls-Royce Holdings PLC it is £9.01 per share (as of Oct 25, 2026), against a price of £12.35. It is the blended result of 24 valuation models (cash flow, earnings, asset, dividend).
Is Rolls-Royce Holdings PLC stock overvalued or undervalued in 2026?
As of Oct 25, 2026, RR trades above its calculated fair value: price £12.35, fair value £9.01, a gap of about −27% (overvalued). The calculation is refreshed with each new quarterly report, so the verdict can change during the year.
Is fair value the same as the market price of RR?
No. The price is what the market pays today (£12.35); the fair value is what the company's own numbers justify (£9.01). For Rolls-Royce Holdings PLC the two are £3.34 per share apart. That gap is exactly why we show both numbers side by side.
How much is Rolls-Royce Holdings PLC worth?
The market values Rolls-Royce Holdings PLC at about £103B (market capitalisation, as of Oct 25, 2026). Per share that is £12.35; our models calculate a fair value of £9.01 per share.
What do the bullish and bearish scenarios say about RR?
Our models span a range for Rolls-Royce Holdings PLC: cautious scenario £6.00, base £9.01, optimistic £12.38 per share (as of Oct 25, 2026, price £12.35). The range comes from different growth and margin assumptions, not from analyst opinions.
What is the P/E ratio of RR?
Rolls-Royce Holdings PLC trades at a price-to-earnings ratio of 34.3 (as of Oct 25, 2026). A P/E on its own says little: it compares the price with ONE year of profit, while our fair value of £9.01 is built from several models across several years. Other multiples: PEG 2.3, P/B 37.9, P/S 4.5, EV/EBITDA 19.4.
What is the PEG ratio of RR?
The PEG ratio of Rolls-Royce Holdings PLC is 2.27 (P/E divided by earnings growth, as of Oct 25, 2026). That is above 1, so the growth is already paid for in the price.
How solid is the balance sheet of Rolls-Royce Holdings PLC (RR)?
Balance-sheet figures for Rolls-Royce Holdings PLC (as of Oct 25, 2026): return on equity 114.5%, debt of 0.65 per unit of equity. They feed the Quality Score of 76/100, which measures business quality independently of the share price.
How far is RR from its 52-week high?
Rolls-Royce Holdings PLC trades at £12.35, about 21% below its 52-week high of £15.64 and 21% above the low of £10.21 (as of Oct 26, 2026). Distance from the high says nothing about value: that is what the fair value of £9.01 is for.
Which stocks are comparable to Rolls-Royce Holdings PLC?
From the same area (Industrials) we also value General Electric Company, RTX Corporation, Safran SA, Lockheed Martin Corporation, among others. Each of them has its own fair-value calculation on this site using the same models, so the comparison is like for like.
Is Rolls-Royce Holdings PLC stock attractive at the current price?
The data as of Oct 25, 2026: price £12.35, calculated fair value £9.01 (−27%), Quality Score 76/100, from 24 models. Whether that fits your horizon and risk tolerance is your call. We provide the calculation, not investment advice.
How is the fair value of RR calculated?
We run Rolls-Royce Holdings PLC through 24 models from four families: discounted cash flow, earnings models, asset and balance-sheet models, and dividend models. Every model gets the same audited fundamentals; the result is the weighted average of £9.01, with the spread shown as a cautious and an optimistic scenario.
Is it still worth investing in stocks now?
The global stock market currently sits 12.7 % above its aggregate fair value. Rolls-Royce Holdings PLC itself currently trades above fair value. An expensive market is no reason to stay out and no reason to buy everything at once: keep a broad savings plan running, buy single stocks only with money you can do without, and hold part of your money liquid while the market is high. The full picture including sectors is on is it worth investing now.
What is the share price of Rolls-Royce Holdings PLC (RR)?
The closing price on Oct 26, 2026 was £12.35. Our model-based fair value is £9.01, about −27% upside (overvalued). We carry closing prices from our data provider, not a live tick.
What should I pay attention to with Rolls-Royce Holdings PLC right now?
A high-quality business (quality 76/100), yet the market already pays well above fair value. Quality at a full price, with little margin of safety. A fairly wide model range (£6.00 to £12.38) leaves room in how you read the outcome.
Key figures of Rolls-Royce Holdings PLC
How large is the market capitalisation of Rolls-Royce Holdings PLC (RR)?
The market capitalisation of Rolls-Royce Holdings PLC is £103B. The stock-market value of the whole company: share price times number of shares. It is what the market asks for the entire business today.
What is the P/S ratio of Rolls-Royce Holdings PLC (RR)?
The price-to-sales ratio of Rolls-Royce Holdings PLC is 4.46 (last twelve months). Price to sales: market value relative to yearly revenue. Useful when profit is thin or distorted.
What are the earnings per share of Rolls-Royce Holdings PLC (RR)?
Earnings per share at Rolls-Royce Holdings PLC are £0.3600 (price ÷ EPS = P/E 34.3). Earnings per share over the last twelve months: total profit spread across every single share.
What is the dividend yield of Rolls-Royce Holdings PLC (RR)?
The dividend yield of Rolls-Royce Holdings PLC is 0.9% (payout 30.6%). Yearly dividend relative to the share price. 3% pays 3 per 100 invested. Below: how much of profit is used for it.
What is the net margin of Rolls-Royce Holdings PLC (RR)?
The net margin of Rolls-Royce Holdings PLC is 13.1% (last twelve months). How much of every unit of revenue ends up as profit. 10% means 10 cents of profit per dollar of sales.
What is the return on equity of Rolls-Royce Holdings PLC (RR)?
The return on equity (ROE) of Rolls-Royce Holdings PLC is 114% (last twelve months). Profit relative to shareholders' equity, how efficiently the company works with its owners' money.
What is the EBIT return on assets of Rolls-Royce Holdings PLC (RR)?
On an EBIT basis the return on assets of Rolls-Royce Holdings PLC is 6.5% (avg 5y). Operating profit (EBIT) relative to everything the company owns, as a multi-year average. It describes the business model rather than one good or bad year.
What is the operating margin of Rolls-Royce Holdings PLC (RR)?
The operating margin of Rolls-Royce Holdings PLC is 21.1% (last twelve months). Profit from the core business (before interest and taxes) relative to revenue.
How fast is revenue growing at Rolls-Royce Holdings PLC (RR)?
Revenue at Rolls-Royce Holdings PLC is growing +20.6% versus a year earlier (3y avg +16.2%). How much revenue grew versus a year earlier (YoY). The 3-year average next to it puts the single year in context.
How fast are earnings growing at Rolls-Royce Holdings PLC (RR)?
Earnings per share at Rolls-Royce Holdings PLC are growing −63.0% versus a year earlier. How much earnings per share grew versus a year earlier.
How much net cash does Rolls-Royce Holdings PLC (RR) hold?
Rolls-Royce Holdings PLC holds more cash than debt, £2.0B net (fiscal year 2025). The company holds more cash than debt, a safety cushion.
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Broad data
Oct 25, 2026