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Eyes Down For Rolls-Royce Holding PLC’s Results

Rolls-Royce

Next Thursday, 13 February, brings us 2013 results from Rolls-Royce Holdings (LSE: RR) (NASDAQOTH: RYCEY.US), and there are good things expected.

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The share price has done well over the past 12 months with a 20% gain to today’s 1,170p level, easily beating the FTSE 100’s 3%. And looking back further we see an even better performance — if you’d bought Rolls-Royce shares five years ago, you’d be sitting on a 250% gain now!

And you could easily see more gains this year.

Earnings rise in 2013

The latest consensus suggests a 12% boost to earnings per share for the year to December 2013, coming on top of rises of 25% and 22% in 2011 and 2012 respectively. And while that looks like slowing growth on the face of it, we need to remind ourselves that the past two years came after a relatively lean period.

Rolls-Royce has been picking up work quite nicely, with November’s third-quarter update listing a number of important new contracts signed since the end of the first half — including orders from Japan Airlines and Lufthansa for Airbus aircraft powered by Rolls-Royce Trent XWB engines, and contracts with various US government departments worth $600m. In addition, the successful first test flight of Boeing’s new 787-9 Dreamliner was powered by Trent 1000 engines.

Trading in line

 At Q3 time the company also told us that “trading is consistent with the guidance for the group provided at our half year results in July“, with Defence Aerospace guidance upgraded a little and Marine guidance lowered slightly. Rolls-Royce said it expects “modest growth in underlying revenue and good growth in underlying profit, with cash flow around breakeven” for the full year.

Consensus forecasts of 66p earnings per share might prove to be a little optimistic, with more recent updates coming in slightly lower than the average — but a majority of analysts have Rolls-Royce down as a Strong Buy.

Modest dividend

Dividend-wise, Rolls-Royce doesn’t pay very much, with yields of only around 2% expected. But at the halfway stage we did see a 13% rise in the interim dividend to 8.6p per share, and a similar rise announced next week would give us a total for the year of about 22p — which would be in line with current forecasts.

All in all, we should seeing “steady as she goes” results.

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> Alan does not own any shares in Rolls-Royce.