UK stock report - Rolls-Royce Holdings

UK

Rolls-Royce rises for a second consecutive day, a two-day rise of 1.2% August 17, 2018 16:30 BST

NEWS BITES - EUROPE

Rolls-Royce Holdings PLC (L:RR.), the 2nd largest Aerospace & defense company by market cap in the United Kingdom, has risen GBX2.0 (0.2%) for a second consecutive day on Friday. This brought its two-day rise to GBX12.0 (1.2%), compared with the FTSE 100 Index which rose 60.7 points (0.8%) in the two days for a relative price increase of 0.4%. Cumulative volume in the 2 days was 0.5 times the average 2-day volume of 5.1 million shares. Rolls-Royce's stock last traded at GBX1,017.0. Its MCap is GBP18.7 billion (US$23.8 billion).

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

SECTION 2 BEARISH SIGNALS

SECTION 3 PRICE VOLUME DYNAMICS

SECTION 4 RELATED NEWS

SECTION 5 GLOBAL RANKING

SECTION 6 SUMMARY FINANCIALS

SECTION 7 PROFILE

SECTION 1 ROLLS-ROYCE BULLISH SIGNALS

1.1 Technicals:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 1,031.87 minus the 26-day EMA of 1,017.58 is positive 14.3 suggesting a bullish signal.

+ In the last three months the stock has hit a new 52-week high thrice.

+ The present value of GBP1,000 (PV1000) invested one year ago in Rolls-Royce is GBP1,146, comprising a capital gain of GBP131 and dividend reinvested of GBP15.

PV10001-week1-month1-year
RR.L9741,0351,146
FTSE 100 Index9869861,023

+ The present value of GBP1,000 (PV1000) invested five years ago in Rolls-Royce is GBP1,106, including a capital loss of 79 GBP and dividend reinvested of GBP107.

+ 5 years Multiplier in GBP = 1.106x

+ Compound Annual Growth Rate (CAGR) in GBP = 2.0%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Rolls-Royce is $US902, including a capital loss of $US185 and dividend reinvested of $US87.

+ 5 years ago GBP 1 equalled USD 1.56

+ 5 years Multiplier in USD = 0.902x

+ Compound Annual Growth Rate (CAGR) in USD = -2.0%

Aug 17, 2018: GBP 1 equals USD 1.27

High Performance Indicators and rank of Rolls-Royce in the United Kingdom market:

DescriptionRR. ValueRank In Market
Today's Trading TurnoverGBP12.9 million (US$16.4 million)In Top 3%
Price/MAP501.04In Top Quartile
Volatility %0.9In Top Quartile
Price/MAP2001.14In Top Quartile
Return on Assets [ROA] %14In Top Quartile

1.2 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.6. Compared with the rest of the market the stock is undervalued.

+ Economic Value Added defined by Net Operating Profit After Tax of GBP1.6 billion less Cost of Capital of GBP333.5 million was GBP1.2 billion. The multiple EVA/Cost of Capital was exemplary at 3.7 times.

+ Total Liabilities/EBITDA of 4.7 is less than the Joseph Piotroski benchmark of 5.

+ Interest cover defined by EBIT/I is 13 times. This indicates it is less leveraged.

1.3 Undervaluation [compared with sector average]:

+ Price/Earnings of 4.4 [8.8].

+ Price/Sales of 0.9 [1.1]. We estimate Rolls-Royce stock is trading at a current year Price/Sales of 0.8 and a forward year Price/Sales of 0.6.

+ Return on Assets 14% [9.0%].

+ Return on Capital Employed 10.9% [9.0%].

+ Price to EBITDA of 3.7 [7.4].

SECTION 2 ROLLS-ROYCE BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of RR., defined by its yield of 1.1%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 2.8% is 41.7%. This suggests Rolls-Royce stock is overvalued in dividend yield terms.

2.2 Overvaluation [compared with sector average]:

+ Dividend yield of 1.1% [2.3%].

SECTION 3 ROLLS-ROYCE PRICE VOLUME DYNAMICS

3.1 Volatility:

+ Rolls-Royce is at a discount of 7.9% to its 12-month high of GBX1,104.50 on August 03. It is also at a premium of 28.2% to the 12-month low of GBX793.46 on March 05.

3.2 Aggregate Volumes and Prices:

[Volume Index or VI in brackets; 1 is average]

+ London: RR.L 1,265,647 [VI of 0.2] volume 99.72% of aggregate. Price: GBX1,017.0.

+ OTC Pink: RYCEF.PINKSHEETS 2,998 [VI of 0.2] volume 0.24% of aggregate. Price: $US13.08. Using the current exchange rate of USD1 equals 78.5939GBX, The shares are at a 1.1% premium to the close price on London.

+ Aggregate volume: there were 1.3 million shares of Rolls-Royce worth GBP12.9 million traded today. The aggregate volume was 0.2 times average trading of 5.1 million shares.

The turnover rate in the 12 months to date was 61.8% (or a turnover period of 1 year 7 months). This average length of ownership of the stock at 81.0 times the average holding period of 7 days for stocks in the FTSE 100 Index suggests a larger number of core investors, making a long-term investment safer.

3.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in RR. would have produced a return of 14.4%.

RR.Close (GBX)Dividends (GBX)Capital Gain / (Loss) %% YieldAnnual Return %
Aug 171,01711.713.11.314.4
1 Yr ago899.3911.717.41.518.9
2 Yrs ago766.2216.371.22.23.4
3 Yrs ago756.8423.1(22.0)2.4(19.6)
4 Yrs ago970.1922(4.7)2.2(2.5)

Close 5 years ago GBX1,017.81

3.4 Beta:

+ Beta: the Beta of Rolls-Royce stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.5 Year-To-Date

+ Rolls-Royce Holdings PLC (L:RR.), advanced GBX177.63 (or 21.2%) year-to-date (YTD) in 2018 to close at GBX1,017.0 today. This means the stock has outperformed 84% of the United Kingdom-listed stocks in 2018. Compared with the FTSE 100 Index which has fallen 0.8% YTD, this is a relative price increase of 22%.

SECTION 4 ROLLS-ROYCE RELATED NEWS

Other News

+ BSS/News Bites:

Rolls-Royce Holdings PLC is placed 431/1346 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 68.

+ Vanguard Total World Stock ETF 2588:

The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 522,906 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-469,833,410 at an estimated Volume Weighted Average Price (VWAP) of $US898.5046. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US0 or 537,424% by value of the ETF's portfolio [Ranked 1391 out of 2588 by value and 45 out of 154 for United Kingdom].

SECTION 5 ROLLS-ROYCE GLOBAL RANKING

Global Rank [out of 47,645 stocks] and Rank of Rolls-Royce in the Europe Region [out of 8,516 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)23.8B610155
Total Assets (US$)38.2B1,071259
Revenue (US$)25.7B561148
Net Profit (US$)5.4B18843
Return on Equity %68.339783
Net Profit Margin %25.84,450905
Price/Earnings4.41,231256
Yield %1.118,0073,366
PV1000 (1Year) USD*1,13412,3222,014
US$* Change (1Year) %11.411,3781,852

* 1 year ago GBP 1 = USD 1.29

Aug 17, 2018: GBP 1 equals USD 1.27

SECTION 6 ROLLS-ROYCE SUMMARY FINANCIALS

6.1 Dividend History

+ Trailing 12 months dividend has deteriorated from GBX22.0 in 2014 to GBX11.7 in 2018.

6.2 Financials Summary (Past 3 years)

Year endedDec 2017Dec 2016Dec 2015
Sales (USD B)25.719.317.5
Pretax (USD)6.2B(5.9B)203.5M
Net (USD)5.4B(5.1B)106.8M
EPS (GBP)2.294(2.2008)0.04

+ Net profit was up 4,909.5% from US$106.8 million in 2015 to US$5.4 billion in 2017.

+ Earnings Per Share (EPS) was up 5,635% from 4.0 GBX to GBP2.29 in the 2-year period.

SECTION 7 ROLLS-ROYCE PROFILE

7.1 Activities

Rolls-Royce Group plc is an integrated power systems company, operating in civil and defense aerospace, marine and energy markets. The Company serves customers in over 120 countries. Its gas turbine products are shipped to customers worldwide, by land, sea and air. It is a global provider of defense aero-engine products and services, with 18,000 engines in service for 160 customers in 103 countries. Its marine business has more than 2,000 customers and equipment installed on over 30,000 vessels worldwide, including those of 70 navies. The Company's energy business is a supplier of power systems for onshore and offshore oil and gas applications. The Company operates in four segments: Civil aerospace, Defense aerospace, Marine and Energy. During the year ended December 31, 2009, the Company acquired 58% interest in Tidal Generation Limited, 49% interest in Europea Microfusioni Aerospaziali S.p.A. and 33% interest in ODIM ASA.

7.2 Top Management

The chairman is Ian Davis, the chief executive officer is Warren East and the chief financial officer is Stephen Daintith.

7.3 Issued Capital

Based on 1,840,595,584 issued shares the market capitalisation is GBP18.7 billion (US$23.8 billion).

COMPANY IDENTIFIERS

State/Province/Country: United Kingdom

Country of Incorporation: United Kingdom

Exchange: London Stock Exchange

Economic Sector: Industrials

Business Sector: Industrial Goods

Industry Group: Aerospace & Defense

Industry: Aerospace & Defense

ISIN: GB00B63H8491

L:RR.; LON:RR.; LN:RR.; RR.L

PermID: 5033562382

RIC: RR.L

Rolls-Royce Holdings Plc

Source: www.BuySellSignals.com