reports
- Jeffrey Vonk
We raise Rolls-Royce’s FVE due to solid execution on large Trent A35...
Rolls-Royce reported excellent 2017 results as underlying operating profit beat our above-consensus estimates, driven by strong activity levels in the high-margin service areas of civil aerospace and power systems. The firm reported pre-IFRS 15 revenue of GBP 15 billion, up 9% year over year on a reported basis and up 6% on an organic basis, with the underlying operating margin expanding by 120 basis points. We are updating our estimates for the latest developments, which will most likely result...
- Jeffrey Vonk
Strong Year-End for Rolls-Royce as Aftersales Accelerated and Power Sy...
Rolls-Royce reported excellent 2017 results as underlying operating profit beat our above-consensus estimates, driven by strong activity levels in the high-margin service areas of civil aerospace and power systems. The firm reported pre-IFRS 15 revenue of GBP 15 billion, up 9% year over year on a reported basis and up 6% on an organic basis, with the underlying operating margin expanding by 120 basis points. We are updating our estimates for the latest developments, which will most likely result...
- Jeffrey Vonk
Over My Dead Wide-Body: Aircraft and Engine Manufacturers Fight to Pro...
The wide-body market is an alphabet soup of aircraft and engine models. Cutting through this Byzantine world reveals smaller wide-bodies (the Boeing 787-9 and Airbus A350-900) outpacing sales for larger aircraft like the Boeing 777X and the Airbus A350-1000. Our projection for smaller wide-body demand of 6,381 aircraft over the next 20 years is driven by our belief that the shift toward smaller wide-bodies will continue and be more pronounced than many believe. We see total demand for about 8,6...
- Jeffrey Vonk
We raise Rolls-Royce’s FVE due to solid execution on large Trent A35...
Narrow-moat Rolls-Royce reported good first-half revenue of GBP 7.6 billion, up 12% year over year on a reported basis and up 6% on an organic basis, with the underlying operating margin expanding 220 basis points year on year. In our note at the end of June, we highlighted our more positive stance on deliveries of large engines in 2017 and beyond, resulting in increased demand for high-margin civil aviation aftermarket services. The growth of the civil aerospace order book at the end of Decembe...
- Jeffrey Vonk
We Raise Rolls-Royce’s FVE Due to Solid Execution on Large Trent A35...
After updating our sales and profit estimates for Rolls-Royce, along with an in-depth analysis of our wide-body aircraft delivery forecasts, adjusting for currency movements, and accounting for the time value of money, we are increasing our fair value estimate to GBX 970 per share (from GBX 780) for the London-listed shares, and to $13 (from $10) for the ADRs. We maintain our narrow moat rating. Given the recent strong share price declines, we believe the shares are undervalued. Solid execution ...
- Jeffrey Vonk
Rolls-Royce’s First-Half Profit Surged Due to Increasing Civil Aviat...
Narrow-moat Rolls-Royce reported good first-half revenue of GBP 7.6 billion, up 12% year over year on a reported basis and up 6% on an organic basis, with the underlying operating margin expanding 220 basis points year on year. In our note at the end of June, we highlighted our more positive stance on deliveries of large engines in 2017 and beyond, resulting in increased demand for high-margin civil aviation aftermarket services. The growth of the civil aerospace order book at the end of Decembe...
- Jeffrey Vonk
Increasing Rolls-Royce's FVE Due to Increasing Civil Aviation Services...
After updating our sales and profit estimates for Rolls-Royce (increasing our fair value estimate by approximately 3%), adjusting for currency movements, accounting for the time value of money (increasing our fair value estimate by approximately 4%), and incorporating modest tax-rate moderation, we are increasing our fair value estimate to GBX 780 per share (from GBX 700) for the London-listed shares, and to $10 (from $9) for the ADRs. We lowered the Rolls-Royce group's tax-rate assumption to 25...
- Jeffrey Vonk
Operating Profit Plummeted in 2016, but Order Growth in Civil Aerospac...
Narrow-moat Rolls-Royce reported rough 2016 results, primarily driven by weakness in the civil aerospace and marine operating segments. In line with our expectations, underlying revenue declined 2% to GBP 13.8 billion (up 9% on a reported basis) versus the prior period, resulting in operating margin contraction of 480 basis points to 6.6% in 2016. In the face of cost-cutting measures to offset lower pricing and volumes in high-margin Trent 700, reductions in its legacy civil large engine afterma...
- Jeffrey Vonk
Rolls-Royce Settles Bribery and Corruption Enquiry for GBP 671 Million...
We are increasing our fair value estimate to GBX 700 per share from GBX 690 for the London-listed shares, as our adjustment for the time value of money (approximately a 4% increase) and marginally lower capital investment expectations more than offset the recently announced bribery and corruption settlements, which amount to GBP 671 million. However, we are decreasing our ADR fair value estimate to $9 per share from $10 after adjusting for the weakening pound. In our ADR estimate, we use a USD...
- Jeffrey Vonk
Narrow Bodies Equal Fat Profits: How Investors Can Profit From the Aer...
This year marks the start of an unprecedented production increase in narrow-body passenger aircraft, a category that will be a major profit growth driver for aircraft and engine manufacturers. We highlight how investors can best gain exposure to narrow bodies in our Industrials Observer, "Narrow Bodies Equal Fat Profits." Although investor sentiment reflects ever-deepening worries over an ineluctable downturn, we posit that demand will remain solid, and we highlight three firms trading at attrac...
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