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 stock price of Rolls-Royce has increased by 1135.3%, significantly exceeding the target price of £13.5 and the projected 100% upside. The thesis regarding cash flow generation and growth in the Aftermarket division has clearly played out, as evidenced by the substantial price appreciation over the elapsed time of 55 months.
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