Rolls-Royce Holdings Plc
Thesis
Rolls-Royce is positioned for significant cash flow generation due to a recent investment period and expected growth in its Aftermarket division. The company is projected to multiply its free cash flow by 2.5 times, with a target price of £13.5 in 2022, representing a 100% upside. Key factors include increasing aftermarket profits, reducing losses per engine sold, and normalizing expenditures after heavy investments.
Did it work?
The long thesis played out dramatically: Rolls-Royce returned +1115.1% over the 55 months since the pitch, far exceeding the stated 100% upside and £13.5 target. While the 2022 timeline proved too aggressive (the stock languished through 2022), the core thesis drivers — aftermarket profit recovery, cash flow normalization after the investment cycle, and improving engine economics — decisively materialized and powered an extraordinary re-rating. Given the magnitude of the return and confirmation of the thesis dynamics, this is a clear win.