Is It Time To Consider Buying Rolls-Royce Holdings plc (LON:RR.)?

Rolls-Royce Holdings plc (LON:RR.) saw a significant share price rise of over 20% in the past couple of months on the LSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy?

Today I will analyse the most recent data on Rolls-Royce Holdings’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Rolls-Royce Holdings

Is Rolls-Royce Holdings Still Cheap?

Good news, investors! Rolls-Royce Holdings is still a bargain right now.

According to my valuation, the intrinsic value for the stock is GBP1.97, but it is currently trading at UKGBP1.49 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Rolls-Royce Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market.

If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Rolls-Royce Holdings?

earnings-and-revenue-growthLSE:RR. Earnings and Revenue Growth April 2nd 2023

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price.

With revenues expected to grow by a double-digit 15% over the next couple of years, the outlook is positive for Rolls-Royce Holdings. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since RR. is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price.

However, there are also other factors such as capital structure to consider, which could explain the current undervaluation. Are you a potential investor? If you’ve been keeping an eye on RR. for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy RR..

But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy. If you want to dive deeper into Rolls-Royce Holdings, you’d also look into what risks it is currently facing. To help with this, we’ve discovered 2 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Rolls-Royce Holdings.

If you are no longer interested in Rolls-Royce Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we’re helping make it simple.

Find out whether Rolls-Royce Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation.

We aim to bring you long-term focused analysis driven by fundamental data.

Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Simply Wall St has no position in any stocks mentioned.

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