Rolls-Royce has reached an unprecedented financial milestone, with its shares crossing the £10 threshold for the first time ever. The engineering giant, headquartered in Derby, began the trading day with shares priced at 988p, pushing its market capitalization to an impressive £83.5 billion. A modest 1.3% gain during the day propelled the stock to 1,001p, marking a new chapter in the company’s remarkable post-pandemic recovery.
This significant upswing means Rolls-Royce’s stock has doubled since September 2024, showcasing a powerful resurgence that has captured the attention of investors. The company’s share price has been on a strong upward trajectory since its pandemic-era lows, defying market turbulence and economic headwinds.
Even in the wake of former U.S. President Donald Trump’s tariff-related announcements in April, which temporarily jolted global markets, Rolls-Royce’s shares quickly resumed their climb. This resilience underscores the market’s confidence in the company’s turnaround strategy and growth potential.
A Remarkable Comeback from Pandemic Lows
Investment analyst Dan Coatsworth of AJ Bell previously noted the company’s impending £10 share price milestone, calling it a “monumental achievement” for a stock that was trading below £1 just three years ago.
“Investors have reaped substantial gains and many believe the stock still has room to grow,” Coatsworth said. “Rolls-Royce stands out as a rare success story in a market riddled with uncertainty.”
Strong Financials and Defense Sector Momentum
The company’s transformation has been fueled by strategic restructuring, increased contract wins, and a global push for heightened defense spending—factors that have all contributed to its bullish stock performance. Coatsworth highlighted that upward revisions in earnings projections are further driving investor optimism.
“While many companies are grappling with downward earnings revisions due to economic instability and trade tensions, Rolls-Royce is consistently seeing its earnings forecasts rise,” he explained.
The revised consensus for Rolls-Royce’s 2026 earnings per share has increased from 22.32p a year ago to 28.93p. This steady climb in expectations has played a critical role in the company’s stock revaluation.
Premium Valuation Brings Cautionary Notes
Despite the celebratory tone, Coatsworth warned that the elevated valuation comes with pressure. The stock is currently trading at 36.3 times its projected earnings for the next 12 months, a steep rise from the 24.3 multiple recorded in October last year.
“This re-rating can’t continue indefinitely,” Coatsworth cautioned. “High-flying stocks like Rolls-Royce need to consistently outperform expectations to justify such premium valuations. A single quarter of average results could trigger a swift correction.”
As Rolls-Royce basks in this historic achievement, the spotlight now shifts to whether it can sustain this momentum and continue delivering beyond expectations.
Frequently Asked Questions (FAQs)
1. Why did Rolls-Royce shares surpass £10?
Strong financial performance, successful restructuring, and increased government defense spending have driven investor confidence, pushing the share price beyond £10 for the first time.
2. How much has Rolls-Royce’s share price increased since 2024?
Since September 2024, Rolls-Royce’s share price has doubled, reflecting a dramatic turnaround from its pandemic-era lows.
3. What risks do investors face with Rolls-Royce at its current valuation?
With shares trading at over 36 times forward earnings, there’s heightened pressure on Rolls-Royce to exceed expectations. Any financial performance that merely meets forecasts could lead to a drop in share value.
4. What sectors are contributing to Rolls-Royce’s growth?
The company is benefiting from growth in the defense sector, increased contract acquisitions, and sustained efforts in corporate restructuring.
5. What was the forecasted earnings per share for 2026 and how has it changed?
A year ago, the 2026 EPS forecast was 22.32p. It has since risen to 28.93p, reflecting stronger financial projections and investor optimism.
