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 investment thesis for Rolls-Royce has played out successfully, with the stock price increasing by 211.1% since the pitch. This significant price appreciation aligns with the expectations of EBIT growth and improvements in the Civil Aftermarket division, confirming the thesis. Given that over six years have passed since the pitch, the results indicate a strong validation of the long position.
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