If you are among those who are interested in trading in the stock markets then maybe you are tempted to speculate on the Rolls Royce share price. But before launching into this adventure you should be able to complete comprehensive and pertinent analyses of this asset. This is why we shall provide you with certain information in this article that will assist you in completing your analyses of the Rolls Royce share price, notably general information on this company and its major activities as well as its sources of income, principal competitors on the market and recent partnerships and alliances. We will also examine the data you should prioritise for completing your fundamental analysis of this asset.
Changes in the aeronautical market represent a major factor to monitor closely as this is the main sector that Rolls Royce sells its engines. A drop of activity in this sector will clearly lead to a loss of orders for this group but a rise will obviously encourage growth.
The strategy that enables Rolls Royce to increase its clients and reach new prospects should also be central to your completion of a fundamental analysis of this asset. In fact, newly signed or renewed partnerships and contracts implemented by this group should be monitored in priority.
It is of course also important to follow the progression and advance of the competitors to the Rolls Royce Group in this activity sector as although the entry barriers are strong certain companies already present in the aeronautical sector have the resources necessary to improve their position in this highly profitable market.
In the same way it is recommended you closely monitor this group’s efforts to diversify its activities, notably those relating to the advance and development of engines destined for other types of non aeronautical related companies and markets.
We would also monitor this company’s implemented and well managed innovation strategy that could rapidly enable it to distinguish itself from its competitors through new technologies and the response to its clients’ requirements.
Finally, it is also important to take into account the financial results of this group that often succeeds in completing strong investments. This group’s orders as well as the growth in its turnover or its general net results are also significant factors to monitor as well as news, events and publications that should be closely followed to best anticipate the future movements in this company’s share price on the stock markets.
We shall now take a few moments to examine the Rolls Royce Company more in detail together with its activities and products. You will thereby better understand this company’s challenges and future growth possibilities.
The Rolls Royce Group is a British company specialised in the design, manufacture and sale of engines destined for the aeronautical, marine, and energy sectors.
To better understand how the Rolls Royce Group generates its revenue we can categorise its engine manufacturing activities as follows:
It can also be advantageous to know the geographical origins of the Rolls Royce Group’s turnover. In fact, 10.9% is generated through the United Kingdom, and 21.4% from the rest of Europe. Then we find the American market with 28.5%, Asia with 23.9%, the Middle East which provides 6.9% and South America which generates 2.3%, Australia with 2.2%, Canada with 1.8%, Africa with 1.5% and the remaining 0.6% from other countries around the world.
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To be fully knowledgeable about the Rolls Royce Company you should also be aware of its principal adversaries in each major activity sector. This is why we will now provide a detailed summary of each of this company’s major competitors according to the different activity sectors:
This large French industrial and technological group is of course a direct competitor to Rolls Royce as it is present throughout the world in the aeronautical sector. It is the result of a merger in 2005 between the Snecma and Sagem companies and has been quoted on the CAC 40 Index since 2011. Safran is also notably specialised in the production of aircraft, helicopter and rocket engines.
This particular American group is also the result of a merger but between the Thomson Houston Electric Company and the Edison General Electric Company. It owns and operates 36 different subsidiaries in over 150 countries and is quoted on the NYSE or New York Stock Exchange. Among the numerous activities of this company is the development and production of aircraft engines.
Another major competitor you should be aware of relating to Rolls Royce is the Pratt & Whitney group, an American manufacturer of aircraft engines that manufactures engines for civil and military aircraft.
This aeronautical manufacturer is of course one of the leaders in the market at present and is based in the United States. It is in fact an aviation company specialised in the design of civil aircraft but is also highly present in other sectors including the military aeronautical sector, helicopters and satellites too as well as launchers through its division Boeing Defence, Space and Security.
The French group Airbus is also a competitor to Rolls Royce in the aeronautical sector. This is in fact an international industrial French cooperative that is present in the civil and military spatial and aeronautical sectors. This group, originally created in the year 2000 under the name EADS, European Aeronautical Defence and Space Company, is currently owned by the Lagardère and Daimler groups and is the result of a combination of nearly all the French, German and Spanish manufacturers.
As you may have noticed from the previous information, the Rolls Royce Group has a number of adversaries in its two principal activity sectors. Luckily it can however count upon the support of certain strategic partners. We will now provide the details of certain prime examples of strategic alliances that this group has recently implemented.
The first partnership that we shall examine here is that implemented between Rolls Royce and the Virgin Galactic Company. This partnership was signed in 2020 with the objective of a non restrictive protocol agreement aimed at developing a reactor for a future aircraft. Among the major sectors upon which these two companies plan to cooperate we particularly note the challenges associated with thermal control, maintenance, noise, CO2 emissions and others related to the economical aspects concerning certain normally high speed flights. It should be remembered here that relating to Virgin Galactic, this company has up to now been at the head of spatial tourism flights with aircraft that were half airplane, half rocket, designed to enable the transport of up to 6 passengers at a time to briefly visit the edges of space. The test flights of this aircraft should soon be completed in the United States before they are made available to the general public.
Still in 2020 Rolls Royce implemented a strategic partnership with the Siemens and Airbus groups. These three groups decided to enter into a collaborative agreement with the aim of developing a short term flight demonstrator as a major step towards electric hybrid propulsion for commercial aircraft. Also, in relation to this project that was presented by the three companies to the Royal Aeronautical Society of London, this demonstrator, named the E-Fan X started operations in 2020 after a comprehensive ground testing programme. This demonstrator tests the different challenges facing this type of propulsion system such as thermal effects, electric thrust control, dynamics effects and electric systems altitude issues as well as any eventual problems relating to electro-magnetic compatibility.
A good knowledge of Rolls Royce and its share price also requires a good understanding of the company's growth capabilities, as these will influence its evolution in the market. It is therefore important to understand the main strengths and weaknesses of this company, which we suggest you discover here:
Let's start this analysis by summarising the main strengths that the Rolls Royce Group has to increase its profitability and boost its share price.
Of course, the Rolls Royce Group does not only have its strengths, but also some difficulties and weaknesses that you should take into account when analysing this stock. Here are its main weaknesses at the moment:
Among the dates you should know relating to the Rolls Royce Group that have made a mark on this company’s history is particularly the 23 December 1904 when the brand first came into existence. We also note the 15 March 1906 when Rolls Royce Limited was founded and finally the year 1998 when the company was acquired by the BMW Group.
It can be advantageous to be aware of the changes in turnover and operational results of the Rolls Royce Company over recent years so we will therefore now examine these figures. From 2016 until the present, the turnover of this group has decreased from €20,293,651,000 to €18,419,153,000 in 2019. It is also important to know the changes in the operational results over the years which passed from €59,707,000 in 2016 to -€907,244,000 in 2019.
It is important to make the distinction between the groups Rolls Royce plc and Rolls Royce Ltd. In fact, Rolls Royce Ltd is an old subsidiary of the Rolls Royce Group that was acquired by the German automobile manufacturer Volkswagen. The company Rolls Royce Plc that we examine in this article is the group that is specialised in the production and development of engines, not for automobiles but for the aeronautical sector. As both companies are quoted on the stock markets it is important not to confuse them.
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