Can Rolls Royce Shares Go Higher

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Can Rolls Royce Shares Go Higher

Can Rolls-Royce Share Go Even Higher?

The share price of Rolls-Royce is near an all-time high, and now many are wondering where it will go next. To understand this, we must take a closer look at the Rolls-Royce fundamentals and all the challenges it is facing.

There's no doubt that Rolls-Royce has made a remarkable turnaround and delivered unbelievable returns to investors. And during the 1H2025, Rolls-Royce recorded a 50% increase in operating profits. On top of that, margins have also improved from just 14% to around 19.1%.

Rolls-Royce Forward P/E Is 53

So, there are a lot of reasons why the Rolls-Royce share price is trading at such elevated levels. However, the forward P/E ratio of Rolls-Royce is 53, which is quite high.

The average P/E ratio of the aerospace and defense sector is around 34. This clearly shows that the market is expecting the Rolls-Royce to outperform the broader market sector.

But we must also understand that Rolls-Royce shares are not cheap at all. On top of that, the dividend yield is also not that attractive.

Also, all the investors who have bought near the ATH are now betting on increased profitability and expansion into new energy sources.

There's no doubt that Rolls-Royce is in a very good spot and has a bright future ahead of it. But, we must also understand that it is just not possible for any stock to outperform the market every single year.

So, for those who want to play the long-term game, it could be worth it to take an entry into the Rolls-Royce stock. But a far better approach will be to wait for a pullback or a correction in the Rolls-Royce stock.

Also, when everyone expects perfection from a stock, even a small risk can lead to major implications. So, if Rolls-Royce misses any earnings or profit estimates, it could lead to massive selling.

But with all things considered, Rolls-Royce stock is still a good option, provided that one gets a good entry.

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