Key Takeaways
- Rolls-Royce has delivered another set of positive results despite global uncertainty and higher oil prices.
- Revenue and profits rose above expectations, resulting in improved guidance for the rest of 2026.
- Morningstar analysis suggests Rolls-Royce stock is currently fairly valued.
Ollie Smith: Another strong set of results has boosted the Rolls-Royce RR. share price in recent days to new record highs. In first-half earnings published on July 30, the FTSE 100’s fourth-largest company announced a 26% rise in revenue and a 46% boost to operating profits compared with last year. Management also raised 2026 profit guidance to between £4.7 billion and 4.9 billion.
Year to date, Rolls-Royce stock has climbed more than 30%—positioning it for its best annual gain since 2025, when shares more than doubled. So what’s driving this success story? And is Rolls-Royce, which makes engines for the likes of Airbus as well as the Eurofighter Typhoon jet, a buy today?
Why Is the Rolls-Royce Share Price Rising?
Rolls-Royce is enjoying the fruits of a business turnaround that has been boosted by rising demand for its products amid a rise in defense spending and growing concerns over global security. In recent results, profits at its civil aerospace division, the company’s largest source of revenue, were up 31%, while defense profits increased 57%. Profits in its power systems division, where its engines power everything from data centers to warships, rose 72%.
Equity analyst Loredana Muharremi says the results strengthen Morningstar financial forecasts for Rolls-Royce. “Defense and power systems provide another layer for maintained upside,” she adds. But she cautions that the rise in civil aviation profits are flattered by an uplift to the value of contracts already agreed and much depends on how long-term service agreements—or LTSAs—are priced.
Should I Buy Rolls-Royce Stock After Earnings?
Rolls-Royce may be one of the standout FTSE 100 success stories of the last few years, but its results were not quite so positive to warrant an increased fair value estimate from Muharremi, who maintains that Rolls-Royce stock is currently worth £15.20. With shares trading marginally above that mark, Rolls-Royce currently earns a 3-star Morningstar rating, so is roughly fairly valued. Investors will now have to wait until February 2026 to see if that improved full-year outlook did indeed get wings.
