UK stock report - Rolls-Royce Holdings

UK

UPDATE: Rolls-Royce outperforms 91% of the market January 19, 2018 16:30 GMT

NEWS BITES - EUROPE

Rolls-Royce Holdings PLC (L:RR.), the 2nd largest Aerospace & defense company by market cap in the United Kingdom, has increased GBX9.40 (1.1%) from its last trading session of January 18 to close at GBX892.80. Compared with the FTSE 100 Index which rose 29.8 points (0.4%) in the day, the relative price increase was 0.7%. The volume was 0.6 times the average daily trading volume of 5.7 million shares. In the United Kingdom market of 1,344 stocks and 118 units traded today, the stock has a 4-day relative price strength of 91 indicating it has outperforming 91% of the market. A price rise combined with a high relative strength is a bullish signal.

ROLLS-ROYCE ISSUED 2 NEW PATENTS IN THE WEEK OF JANUARY 17, 2018

Rolls-Royce (RR.) has been issued 2 new patents by the USPTO and EPO.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Technicals, High Performance Indicators, A positive finish to 2017

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Volatility, Moving Annual Return, Beta, Aggregate Volumes, Prices and Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 REPORTED BUYING AND SELLING

SECTION 8 PATENTS

SECTION 9 STOCK BUZZ

SECTION 1 ROLLS-ROYCE BULLISH SIGNALS

1.1 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.

+ The company is cash rich with Cash to Market Capitalisation at 16.9%.

1.2 Technicals:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 868.95 minus the 26-day EMA of 864.48 is positive 4.47 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ The present value of GBP1,000 (PV1000) invested one year ago in Rolls-Royce is GBP1,306, comprising a capital gain of GBP288 and dividend reinvested of GBP18.

PV10001-week1-month1-year
RR.L1,0371,0361,306
FTSE 100 Index9941,0141,072

+ The present value of GBP1,000 (PV1000) invested five years ago in Rolls-Royce is GBP1,186, including a capital gain of GBP70 and dividend reinvested of GBP117.

+ 5 years Multiplier in GBP = 1.186x

+ Compound Annual Growth Rate (CAGR) in GBP = 3.5%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Rolls-Royce is $US1,031, including a capital loss of $US70 and dividend reinvested of $US102.

+ 5 years ago GBP 1 equalled USD 1.6

+ 5 years Multiplier in USD = 1.031x

+ Compound Annual Growth Rate (CAGR) in USD = 0.6%

Jan 19, 2018: GBP 1 equals USD 1.39

1.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP31.1 million (US$43.3 million)In Top 3%
Price Change %1.1In Top Quartile
Cash to MCap %16.9In Top Quartile
Price/MAP501.03In Top Quartile

1.4 A positive finish to 2017

The stock has soared GBX284.0 (or 50.5%) over the past two years, after rising 19.0% in FY2016 and 26.6% in FY2017 to close at GBX846.50.

SECTION 2 ROLLS-ROYCE BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 1.3%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 2.8% is 47.0%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 172.8 which compares unfavourably with the Joseph Piotroski benchmark of 5.

2.2 Overvaluation [compared with sector average]:

+ Return on Capital Employed 0.9% [5.8%].

+ Dividend yield of 1.3% [2.3%].

2.3 Technicals:

Overbought/Bearish/Resistance Signals:

+ At GBX892.80 the price has risen above the upper Bollinger band resistance of GBX892.07, indicating a downside risk for it to fall back within the band.

2.4 Low Performance Indicators:

DescriptionValueRank In Market
Total Debt to Equity4.9In Bottom 1%
EBITDA Margin %0.9In Bottom 1%
Return on Capital Employed [ROCE] %0.9In Bottom 2%

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Volatility:

+ Rolls-Royce is at a discount of 9.8% to its 12-month high of GBX989.63 on August 01, 2017. It is also at a premium of 37.4% to the 12-month low of GBX649.64 on January 30, 2017.

3.2 Moving Annual Return

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 30.5%.

RR.Close (GBX)Dividends (GBX)Capital Gain / (Loss) %% YieldAnnual Return %
Jan 19892.811.728.81.730.5
1 Yr ago693.0511.732.62.234.9
2 Yrs ago522.4923.37(35.7)2.9(32.9)
3 Yrs ago812.9622.4(29.4)1.9(27.5)
4 Yrs ago1,152.2720.5382.540.5

Close 5 years ago GBX834.76

3.3 Beta:

+ Beta: the Beta of Rolls-Royce stock is 1.2. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

3.4 Aggregate Volumes, Prices and Turnover Period:

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

+ London: RR.L 3,488,046 [VI of 0.6] volume 99.66% of aggregate. Price: GBX892.80.

+ OTC Pink: RYCEF.PINKSHEETS 7,351 [VI of 0.4] volume 0.21% of aggregate. Price: $US12.38. Using the current exchange rate of USD1 equals 71.8419GBX, The shares are at a 0.4% discount to the close price on London.

+ Frankfurt: RRU.FRA 4,500 [VI of 0.6] volume 0.13% of aggregate. Price: EUR10.27. Using the current exchange rate of EUR1 equals 88.1518GBX, The shares are at a 1.4% premium to the close price on London.

+ Aggregate volume: there were 3.5 million shares of Rolls-Royce worth GBP31.2 million traded today. The aggregate volume was 0.6 times average trading of 5.8 million shares.

The turnover rate in the 12 months to date was 67.8% (or a turnover period of 1 year 5 months). This average length of ownership of the stock at 74.0 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.

SECTION 4 RANKING

4.1 Global Rank [out of 47,420 stocks] and Rank in the Europe Region [out of 8,522 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)22.9B700177
Total Assets (US$)35.3B1,137279
Revenue (US$)20.7B701181
Net Profit (US$)(5.6B)42,2327,038
Net Profit Margin %(27.0)33,4955,622
Yield %1.314,9332,881
PV$1000 (1Year) US$*1,4669,7212,124
US$* Change (1Year) %44.010,1612,193

* 1 year ago GBP 1 = USD 1.23

Jan 19, 2018: GBP 1 equals USD 1.39

4.2 Independent Ratings

+ FT 500:

Rolls-Royce Holdings PLC is the 203rd largest by revenue in the FT Global 500.

+ Industryweek 1000:

It is a new entrant in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2016, ranked 192.

+ Forbes 2000:

It is the 418th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 394/1306 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 70.

+ Vanguard Total World Stock ETF 7457:

The stock was one of 7457 global stocks selected by Vanguard Total World Stock ETF (VT). As at November 30, 2017, the Vanguard Total World Stock ETF held 453,570 shares worth $US5,657,727 or 0.04% by value of the ETF's portfolio [Ranked 454 out of 7457 by value and 30 out of 303 for United Kingdom].

SECTION 5 ROLLS-ROYCE FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)20.318.618.9
Pretax (USD)(6.3B)216.8M90.8M
Net (USD)(5.5B)113.8M93.5M
EPS (GBP)(2.2)0.040.04

Net profit slumped from US$113.8 million in 2015 to a loss of US$5.5 billion in 2016. Earnings Per Share (EPS) fell from 4.0 GBX to -GBP2.20.

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (GBX)
19 Jan 201811.7
19 Jan 201711.7
19 Jan 201623.37
19 Jan 201522.4
19 Jan 201420.5

SECTION 6 ROLLS-ROYCE PROFILE

6.1 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.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorIndustrials
Business SectorIndustrial Goods
Industry GroupAerospace & Defense
IndustryAerospace & Defense

6.3 Top Management

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

6.4 Issued Capital

Based on 1,840,595,584 issued shares the market capitalisation is GBP16.4 billion (US$22.9 billion).

SECTION 7 REPORTED BUYING AND SELLING

Insider Buying

January 09: Rolls-Royce director buys

Rolls-Royce (L:RR.) director Simon Kirby bought 17 shares worth GBP148 ($US201) on January 08. The purchase price was GBP8.71. The shares hit a 20-day high on the day.

January 08: Rolls-Royce director buys

Rolls-Royce (L:RR.) director Frank Chapman bought 457 shares worth GBP3,959 ($US5,371) on January 08. The purchase price was GBP8.66. The shares hit a 20-day high on the day.

January 08: Rolls-Royce director buys

Rolls-Royce (L:RR.) director Kevin Smith bought 305 shares worth GBP2,642 ($US3,584) on January 08. The purchase price was GBP8.66. The shares hit a 20-day high on the day.

January 08: Rolls-Royce director buys

Rolls-Royce (L:RR.) director Ian Davis bought 229 shares worth GBP1,984 ($US2,691) on January 08. The purchase price was GBP8.66. The shares hit a 20-day high on the day.

January 08: Rolls-Royce director buys

Rolls-Royce (L:RR.) director Ruth Cairnie bought 224 shares worth GBP1,940 ($US2,633) on January 08. The purchase price was GBP8.66. The shares hit a 20-day high on the day.

SECTION 8 ROLLS-ROYCE PATENTS

Issued January 17, 2018

GAS TURBINE ENGINE COMPONENT [EP3269931 (A1)]

Described is a gas turbine engine component (100), comprising a shell having an internal cavity for receiving a multi-part insert; a multi-part insert located within the cavity, wherein the multi-part insert comprises multiple separate parts assembled in an abutting relation with one another within the cavity to provide the multi-part insert; wherein the assembled insert includes at least one retention part, the retention part engaging with a wall of the cavity and at least one other insert part so as to retain the assembled insert within the cavity

ASSEMBLY FOR SUPPORTING AN ANNULUS AND METHOD FOR ASSEMBLING THIS ANNULUS [EP3269939 (A1)]

An assembly for supporting an annulus (74) is described. The annulus is bound by an inner hub wall (68a) and an outer casing (69) and comprises a support structure, the support structure bearing the inner hub wall (68a); at least one spigot (70) passing through the hub wall (68a) and at least one strut (75) arranged to pass through the spigot (70) of the inner hub wall and across the annulus (74). The strut (75) has a first end having an abutment arm (64) extending to form an abutment shoulder (67). Alignable holes pass through the abutment arm (64) and the spigot (70) and these holes are configured to receive a cross pin (66) which is in turn configured to fit snugly through the holes. The configuration is such that, the abutment rim (65) and abutment shoulder (64) are located radially inwardly of the holes and cross pin (65) and outside of the annulus (74)

To view more details on these Patents, click here

SECTION 9 STOCK BUZZ

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January 18: Rolls-Royce: Further Simplification of Business

Rolls-Royce announces that it is embarking on a further simplification of the business, including the evaluation of strategic options for our Commercial Marine operation and a reduction from five operating businesses to three core units based around Civil Aerospace, Defence and Power Systems. As part of this exercise, we plan to consolidate our Naval Marine and Nuclear Submarines operations within our existing Defence business, and Civil Nuclear operations within our Power Systems business.

January 16: Rolls-Royce and PSEG sign contract for nuclear digital services

Rolls-Royce has signed a four-year contract to provide US nuclear utility operator, PSEG, with its innovative digital analytics service to help drive greater plant efficiency.

The four-year contract will see the deployment of Rolls-Royce's T-104 service focus on efficiency savings and optimized maintenance activities at PSEG's two nuclear power plants at Salem and Hope Creek Nuclear Power Plants in New Jersey, USA.

January 16: Rolls-Royce: Total Voting Rights

Voting Rights and Capital On Friday 12 January 2018, the Company announced that application had been made to the UK Listing Authority for the listing of, and to the London Stock Exchange for the admission of 9,612,581 ordinary shares of 20p each fully paid, ranking pari passu with the existing ordinary shares, to the official list.

January 16: Rolls-Royce signs collaboration agreement with MVM OVIT

Rolls-Royce has signed a Memorandum of Understanding with Hungarian state-owned MVM OVIT National Power Line Company Ltd, part of the MVM Group, to explore how they can work together on the provision and maintenance of Instrumentation and control (I&C) systems for the second reactor planned to be built at the Paks nuclear Power Plant in Hungary.

Neil Parison, Director, strategic accounts - Nuclear, Rolls-Royce said: "We are pleased to work with MVM OVIT and explore the potential areas where we can work together to deliver world-leading I&C systems for the Paks nuclear power plant.

January 15: Statement Re: Press Speculation

Rolls-Royce notes the recent media speculation and confirms that it is reviewing its strategic options for L'Orange.

Irrespective of the outcome of this review, Rolls-Royce intends to maintain close ties to L'Orange, either as an owner or as a key customer.

This review has no impact on the remainder of the Rolls-Royce Power Systems business and any decision about the future of L'Orange would be subject to the approval of the Supervisory Board of Rolls-Royce Power Systems.

State/Province/Country: United Kingdom

Country of Incorporation: United Kingdom

Exchange: London Stock Exchange

ISIN: GB00B63H8491

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

PermID: 5033562382

Rolls-Royce Holdings Plc

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