Rolls-Royce earnings preview: Can the aerospace giant sustain transformation momentum?
Rolls-Royce reports full-year 2025 results on 26 February, with investors focused on civil aerospace margins, cash generation and strategic transformation progress.
Rolls-Royce earnings preview: Can the aerospace giant sustain transformation momentum?
Rolls-Royce PLC, the UK-listed aerospace and engineering group, is due to report its full-year 2025 results on 26 February 2026, providing a critical update on how the company’s multi-year transformation is translating into financial performance and strategic momentum across its core divisions.
Rolls Royce 5-year total return graph
Rolls Royce is expected to report higher revenue and significantly stronger pre-tax profit, earnings per share (EPS) compared to full-year 2024 results.
Revenue:
£19.81 billion, 12.1% above its FY 2024 £17.85 billion result.
Pre-tax profit:
£3.3 billion, around 44% higher than a year ago.
EPS:
28.81 pence, around 43% higher than a year ago.
Strong first-half sets high expectations
Investors are approaching the release with keen interest after a strong first half of 2025, when Rolls-Royce delivered an underlying operating profit of £1.7 billion - up roughly 50 percent year-on-year (YoY) - and raised its full-year guidance for both profit and free cash flow.
The company entered the year with upgraded expectations that underlying operating profit would reach £3.1 billion - £3.2 billion, while free cash flow was forecast between £3.0 billion and £3.1 billion. That guidance reflected significant operational progress, including improved civil aerospace aftermarket margins and momentum in Power Systems, even as supply-chain disruptions and tariff headwinds persisted.
Rolls-Royce’s strategic transformation, led by CEO Tufan Erginbilgic, has been centred on improving profitability and cash generation while repositioning the company’s portfolio.
During the first half of 2025, the group also completed part of a £1 billion share buyback programme, sustained dividend payments and strengthened its net cash position, with a reported net cash balance above £1 billion at mid-year.
Civil aerospace remains earnings driver
Ahead of the full-year results, analysts will focus closely on several key areas:
- The Civil Aerospace division remains central to Rolls-Royce’s earnings prospects. This segment has benefited from stronger “time on wing” performance for key engine platforms and negotiated improvements in aftermarket contractual terms, enhancing margin quality, trends that markets will want to see confirmed in full-year numbers.
- Free cash flow generation and balance-sheet metrics will also be under scrutiny. Rolls-Royce’s ability to convert profit into cash - particularly against a backdrop of continued supply-chain pressures and elevated working capital demands - is a critical measure of the sustainability of its turnaround.
- The 2025 interim results pointed to robust operating cash flow and free-cash-flow delivery, forming a baseline against which year-end performance will be assessed.
According to LSEG Data & Analytics, analysts rate Rolls Royce as a ‘buy’ with a mean long-term price target at 1,272.41p, around 5% below the current share price, as of 20 February 2026.
Rolls-Royce LSEG Data & Analytics chart
Rolls-Royce also has a TipRanks Smart Score of ‘8 Outperform’ and is rated as a ‘strong buy.’
Rolls-Royce TipRanks Smart Score chart
Capital allocation strategy evolves
The company’s capital allocation strategy, including dividends and share repurchases, may also feature in management commentary. After reinstating dividend payments and making progress on buybacks during 2025, investors will look for signals on how Rolls-Royce plans to balance recurring distributions with future investment in growth, particularly in areas like defence and new technology platforms.
Defence and power provide diversification
Beyond core civil aviation, Rolls-Royce’s defence and power divisions offer diversified earnings exposure. Demand for defence engines and services has risen in many markets, while the Power Systems division is positioned to capture growth from data-centre and governmental contracts. These segments could provide ballast if broader economic conditions or airline capex trends soften.
Guidance shapes 2026 expectations
Guidance for 2026 will be another focal point that may influence share price reaction more than historical results.
Although analysts have trimmed some near-term earnings forecasts - with expectations for EPS revision modestly lower over the last year - consensus still anticipates continued growth, albeit at a slower pace than the outsized gains seen in earlier 2025.
What the full-year results mean for investors
Overall, Rolls-Royce’s 26 February 2026 earnings release represents a key test of whether the company’s transformation is yielding durable improvements in profitability, cash flow and returns for shareholders.
A strong set of results could reinforce confidence in Rolls-Royce’s operational trajectory and underpin continued multiple expansion for the stock, while any signs of margin pressure, cash-flow weakness or overly cautious guidance could temper expectations after a period of strategic progress.
Technical analysis of the Rolls-Royce share price
The Rolls-Royce share price, up around 11% year-to-date (YTD) and by over 115% over the past year, is trading in record highs with the minor psychological 1500p region being eyed.
Rolls-Royce weekly candlestick chart
The medium-term uptrend is deemed to be intact while the January and February lows at 1191p hold on a daily chart closing basis.
Rolls-Royce daily candlestick chart
Were support at 1191p to unexpectedly give way, though, the October 2025 to mid-December highs at 1181.5p - 1178p may be revisited. Further potential support sits at the late December low at 1131p.
How to invest in Rolls-Royce shares
Investors interested in UK aerospace exposure through Rolls-Royce have several options.
Here's how to approach investing in this engineering company:
- Research Rolls-Royce's latest results, transformation progress and aerospace industry trends thoroughly. Understanding civil aviation recovery dynamics and defence spending helps inform investment decisions. How to invest in stocks provides useful background.
- Download IG Invest or open a share dealing account to access UK-listed shares. Rolls-Royce trades on the London Stock Exchange under ticker RR.
- Search for Rolls-Royce Holdings plc shares on the trading platform. Review current pricing, dividend yields and analyst recommendations before making investment decisions.
- Choose the number of shares or value of money you'd like to invest based on your portfolio allocation strategy. Consider whether to hold shares in a general account, individual savings account (ISA) or self-invested personal pension (SIPP) for tax efficiency.
- Place your trade and monitor your investment over time. Rolls-Royce provides half-yearly results and quarterly trading updates, offering insight into operational and financial performance.
Remember that aerospace stocks are cyclical and sensitive to economic conditions affecting air travel. Diversification across multiple sectors reduces concentration risk whilst maintaining exposure to aerospace recovery and transformation stories.
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