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Rolls-Royce Holdings plc (LON:RR.) received a lot of attention from a substantial price increase on the LSE over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Rolls-Royce Holdings’s outlook and valuation to see if the opportunity still exists.
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Is Rolls-Royce Holdings Still Cheap?
Good news, investors! Rolls-Royce Holdings is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is £11.46, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Rolls-Royce Holdings’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
View our latest analysis for Rolls-Royce Holdings
What does the future of Rolls-Royce Holdings look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -1.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Rolls-Royce Holdings. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although RR. is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to RR., or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on RR. for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.