Rolls-Royce Holdings Plc
Thesis
The investment thesis for Rolls-Royce is based on the expectation of significant EBIT growth from £600m to over £2,000m, driven by improvements in the Civil Aftermarket division and a reduction in engine losses. The company is also expected to normalize maintenance costs and reduce capital expenditures, leading to a compelling upside potential for the stock price, which could double by 2022.
Did it work?
The long thesis targeted a doubling of the share price by 2022 on the back of EBIT growing from ~£600m to over £2,000m, driven by Civil Aftermarket recovery and reduced engine losses. Over the 79 months since the pitch, the stock returned +22,563.7%, vastly exceeding the stated 'double' target, and the fundamental catalysts (aftermarket-led profit recovery past the £2bn EBIT level) materialized. Even allowing for interim volatility, the thesis direction and its specific targets were decisively confirmed.