Rolls-Royce’s share price started the year strong as all three of its business segments grew. RR’s share price jumped over 70% during the past six months. It is now one of the top performers in the FTSE 100 Index. In the last few years, it has increased by over 1,000%. Will the bullish trend continue into July?
The catalyst for change will be half-year results
The Rolls-Royce share price is in the spotlight as the company releases its half-year financial results this month on the 31st of July. The results of the half-year will give more information about Rolls-Royce’s business, and whether or not its growth is still on track.
In the same half-year results of last year, its operating profit increased by 74% and reached PS1.1 billion. Its operating margin also grew from 4.4% to 14.4%. The growth in margins was seen across the board, from the aerospace sector, which reached 18%, to the power and defence systems, where they rose respectively by 15.5% and 10%.
The company is showing signs of better results than anticipated. The civil aviation sector has recovered completely and is now at levels comparable to those pre-pandemic. Its business is doing very well, as it earns most of its revenue from long-term contracts that are charged on an hourly basis.
AI is expected to drive the power sector to growth this year. The UK and Czech utilities, for example, have chosen the company as a supplier of small modular reactors. Morgan Stanley estimates that the division’s annual revenue could be over PS10billion.
Rolls-Royce also benefits from ongoing defense expenditures, which benefit the companies of the military-industrial-complex. Trump recently pressed NATO nations to raise their defense expenditures to 5%.
Several European countries have increased their spending. Recently, the UK committed PS20 billion to nuclear deterrence. It also ordered new subs.
Rolls-Royce will benefit from the European leaders’ visit to China this month to celebrate trade ties. We reported that Chinese Airlines are likely to order more than 500 Airbus aircraft as the US-China relationship deteriorates. Rolls-Royce is used in many Airbus aircraft.
Rolls-Royce Share Price Analysis
Daily chart of the RR share price shows a bullish trend in recent months. As predicted, it has increased from 576p on January 1, to almost 1,000p.
It is still above the moving averages and this indicates that bulls have control. The stock also continues to remain above an important resistance level of 808p – the highest point in March.
This year, both the Relative Strength Index and MACD indicators continued to rise.
The stock is likely to continue increasing as long as the bulls are aiming for the psychological 1,000-p level. After hitting this resistance, it is likely to pull back as investors book profits. It is possible that the price could drop below 950p before it continues its upward trend.
The post Rolls-Royce Share Price Forecast for July: Should you buy or sell? This post may be updated as new information unfolds.