RR (Rolls-Royce Holdings PLC) vs FTSE All Share Index Comparison

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Rolls-Royce Holdings PLC
Glance View

Economic Moat

None

Market Cap

68.9B GBX

Industry

Aerospace & Defense

Rolls-Royce Holdings PLC is a testament to British innovation, crafting a legacy that transcends the brand's storied history rooted in luxury automobiles. Originally founded in 1904, the company has since evolved, pivoting its core business towards the engineering and manufacturing of power systems. Today, Rolls-Royce Holdings PLC operates as a multinational public company with a strategy centered on producing engines for aerospace, marine, and industrial applications. This transition highlights a meticulous expansion beyond their renowned motorcars into becoming an integral player in the global aerospace market. Making strides as a leader in sophisticated engineering, the company focuses on designing and ongoing servicing of power systems that are both efficient and sustainable. Through this, Rolls-Royce generates revenue, primarily from the sale of its advanced turbine engines and the long-term service contracts associated with them. The company's financial heartbeat stems from creating some of the most advanced technology in the aviation sector. Rolls-Royce's Trent engine series, used in commercial airline fleets worldwide, showcases its prowess in innovation and precision engineering. These engines are fundamental to their revenue model, as they are not only sold to prestigious airlines but also supported through extensive service contracts that ensure long-term engagement and recurrent income. These contracts account for a significant portion of Rolls-Royce's revenue, as regular maintenance, repairs, and updates are not just necessary but essential to keeping the airplanes operating seamlessly and efficiently. Furthermore, Rolls-Royce's commitment to research and development underpins its competitive edge, allowing it to offer cutting-edge solutions like hybrid-electric propulsion systems, aligning its tradition of technological excellence with the movement towards greener aviation.

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RR Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

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FR	Safran SA PAR:SAF	Select
US	Lockheed Martin Corp NYSE:LMT	Select
DE	Rheinmetall AG XETRA:RHM	Select
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UK	BAE Systems PLC LSE:BA	Select

US	Raytheon Technologies Corp NYSE:RTX	Add
US	RTX Corp LSE:0R2N	Add
US	Boeing Co NYSE:BA	Add
NL	Airbus SE PAR:AIR	Add
FR	Safran SA PAR:SAF	Add
US	Lockheed Martin Corp NYSE:LMT	Add
DE	Rheinmetall AG XETRA:RHM	Add
US	TransDigm Group Inc NYSE:TDG	Add
US	General Dynamics Corp NYSE:GD	Add
UK	BAE Systems PLC LSE:BA	Add

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RR

vs

FTSE All Share Index

Stocks Performance
RR vs FTSE All Share Index

Performance Gap
RR vs FTSE All Share Index

Performance By Year
RR vs FTSE All Share Index

Competitors Performance
Rolls-Royce Holdings PLC vs Peers

Rolls-Royce Holdings PLC
Glance View

Company

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RR vs FTSE All Share Index

Stocks Performance RR vs FTSE All Share Index

Performance Gap RR vs FTSE All Share Index

Performance By Year RR vs FTSE All Share Index

Competitors Performance Rolls-Royce Holdings PLC vs Peers

Rolls-Royce Holdings PLC Glance View

Company

Help

Tools

Stocks

RR

vs

FTSE All Share Index

Stocks Performance
RR vs FTSE All Share Index

Performance Gap
RR vs FTSE All Share Index

Performance By Year
RR vs FTSE All Share Index

Competitors Performance
Rolls-Royce Holdings PLC vs Peers

Rolls-Royce Holdings PLC
Glance View