Rolls-Royce Holdings plc LON:RR., the aerospace and defence group behind many of the world’s most advanced aircraft engines has delivered one of its strongest years in over a decade, marking a decisive shift from post-pandemic recovery to clear, sustained growth.
For the second year running, Rolls Royce has been one of the FTSE 100’s top 10 best performing stocks of the year. So far in 2025, Rolls Royce, the UK aero-engineering firm, has risen by 80%, significantly outperforming some of the AI big hitters like Nvidia and Alphabet. The stock continues to gain from the defence trade, which is a key theme driving European markets.
A breakout year for revenue and profitability
After hitting a record high at the end of September, Rolls Royce has struggled to gain traction, and has been under some downward pressure alongside broader global stock market volatility. The stock price is down 8% in the past month. This has not been driven by fundamentals, which remain strong. First half revenues and net income were stronger than expected, and the company’s gross profit margin soared to more than 30% for the first 6 months of this year, higher than the 21% rate for the final 6 months of 2024.
The company is profitable, and while revenue and net income estimates for the second half of this year have been revised down slightly, this means that the bar is lower, and earnings could well exceed estimates when they are released in February 2026.
Rolls Royce share price psychological support level
Analysts believe that recent weakness in the Rolls Royce share price could attract bargain hunters, who are looking to buy strong, financially healthy companies on a dip. Although RR’s share price has fallen below the 50-day and 100-day moving averages, the share price managed to find strong support above the 1000p level, which is a key psychological support level. If broader market sentiment recovers, then Rolls Royce could see its stock price recover into year end.
The stock may look highly valued to other parts of the FTSE 100, however, its forward 12-month Price to Earnings ratio of 36 times, is cheaper than its global peers, including Rheinmetall, a German defence behemoth, which trades at 46 times earnings.
If there is a Santa Rally at the end of this year, Rolls Royce could be in demand.
Chart 1: Rolls Royce, daily 1-year chart with SMAs.
Source: Bloomberg. Past performance is not a reliable indicator of future results.
Engine flying hours and sector recovery
A key driver of Rolls-Royce’s performance has been the sustained recovery in wide-body engine flying hours, a core determinant of its long-term service revenues. For the 10 months to October 2025, flying hours rose by around 8% year-on-year, reaching 109% of 2019 levels. This milestone signals not only a full recovery of long-haul travel but the beginning of expansion beyond pre-pandemic benchmarks.
A simple way to start investing in Rolls-Royce
XTB is currently offering all new clients a free Rolls-Royce share, giving investors an easy, accessible way to begin their investing journey. This provides a straightforward entry point into one of the UK’s most exciting industrial turnaround stories, with potential long-term upside tied to global aviation recovery and engine-service revenues. The offer is valid until 30th November, so make sure to claim yours.
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