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Quarterly update, February 2023
- Financial full year 2023 revenues at £15.4bn against £12.7bn in 2022
- Underlying operating profit of £1.6bn compared with £0.65bn in 2022
- 2023 earnings per share at 13.75p against 1.95p 12 months earlier
- Company expects underlying profit to rise by up to £2 billion in 2024.
Rolls-Royce Holdings PLC is a UK-based business that develops and builds power and propulsion solutions for use the air, at sea and on land.
The company’s core operating businesses include Civil Aerospace, Defence, Power Systems, and New Markets.
Civil Aerospace manufactures engines for the commercial aircraft, regional jet, and business aviation markets. Defence provides aero engines for military transport and patrol aircraft. Power Systems makes high-speed engines and propulsion systems, while New Markets is involved in the development, manufacture, and sales of small modular nuclear reactors and other power supplies.
Here’s what you need to know about buying and selling Rolls-Royce shares.
Why own stocks and shares?
It’s worth asking yourself why you want to buy shares. Are you looking for capital growth, income from dividends, or a combination of both? Your investment objective will determine what type of shares you invest in, from high-growth technology shares to more ‘defensive’ companies with a potentially reliable income dividend stream.
Most investors look for sound fundamentals, including a track record of consistent earnings growth, a strong market position, or products and services with growth potential. These should provide a solid platform for a share price increase.
That said, factors such as takeover rumours can drive up a company’s share price. Investors may also be attracted by recovery plays, with a depressed share price providing potential for a rebound.
How to buy Rolls-Royce shares
There are several steps to take once you’ve satisfied yourself about the reasons for buying shares in a particular company.
Open an account
Whether you’re a seasoned share trader, or someone who is brand new to stock market-based investments, if you want to buy shares in Rolls-Royce, you’ll need to open an account with a regulated brokerage.
Stockbroking services for DIY investors come in a range of guises – from online investing platforms to investment trading apps that work off a smartphone or tablet.
Before opening an account:
- Keep your ultimate financial goals in mind
- Be prepared to ride out stock market ups and downs
- Aim to keep trading costs to a minimum
- Remember that share investing can prompt tax charges, for example, when selling stocks
Before buying shares, ask yourself:
- Should I take professional financial advice?
- Am I comfortable with the level of risk?
- What’s my budget?
- Can I afford to lose money?
- Do I understand the company in which I’m looking to invest?
- Am I protected if my platform provider/advisor goes out of business?
Tax treatment depends on one’s individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of tax advice.
Know where Rolls-Royce shares are traded
The stock market ticker for Rolls-Royce is RR. The company is traded on the London Stock Exchange which is open Monday to Friday from 8am to 4.30pm. Rolls-Royce is a component of the FTSE 100 stock index of leading UK companies.
It should be possible to buy Rolls-Royce shares through all UK-based brokerage accounts.
Do your research
To find out more about Rolls-Royce, visit the company’s online investor relations page. When weighing up whether or not to buy shares in the company, it could be worth comparing Rolls-Royce’s valuation to that of comparable rival companies. One way to do this is to look at relative price-earnings, or P/E, ratios. Shares trading on a high P/E suggest high expectations of substantial future growth.
Another potentially useful research tool is brokers’ 12-month share price forecasts, available via online investing platforms. There are a number of brokers who follow Rolls-Royce and their share price forecasts give an indication of the upside and downside potential of the share price over the coming year.
What is your investing strategy?
People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts, over a period of time.
The latter benefits from a process known as ‘pound cost averaging’, an investing technique which helps investors pay less per share on average over time in falling stock markets. Rather than waiting to build up a lump sum, it also means an investor’s money can be put to use in the market straightaway.
On the downside, drip-feeding an investment may sacrifice investment growth if a stock’s price is rising and, depending on your broker/platform, you may also pay more in share trading fees.
Place an order
Once you’re ready to buy Rolls-Royce shares, log in to your investing account or trading app. Type in the RR. ticker along with the number of shares you want to buy, or the amount of money you’re prepared to invest.
Some brokers allow their customers to add a ‘stop loss’ once they have bought the shares, enabling them to limit any losses should a share price fall.
Review Rolls-Royce’s performance
Whether your share portfolio is crammed full of companies, or holds only a handful of stocks, it’s vital that you review how each component is performing on a regular basis: monthly, quarterly, or annually.
Doing this provides the opportunity to review performance and consider whether any adjustments to holdings are required, namely, to maintain the status quo, buy more shares, or sell existing stock.
How to sell shares
At some point, you might want to sell your holdings. To do this, log in to your platform, type in the Rolls-Royce ticker and select the number of shares or amount you want to sell.
Note that if you’ve made a substantial profit and your holding was not ring-fenced in some way, say via a tax-efficient vehicle such as an individual savings account, then you might be liable for capital gains tax. The CGT tax-free allowance for the tax year 2023-24 is £6,000. This reduces to £3,000 for the tax year 2024-25.
How to invest in Rolls-Royce via a fund
Investing directly in shares can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.
Investing directly in companies can, however, leave you vulnerable to stock market volatility and unforeseen swings in share prices.
That’s why financial experts recommend that most people invest in a diversified mix of asset classes and investment funds that hold ready-made portfolios of different company shares, often dozens or even hundreds at a time.
As a large UK multinational operation that’s part of the FTSE 100 index, Rolls-Royce is found in many UK equity, index tracker and exchange-traded funds.
