Rolls-Royce Earnings and £1.5 Billion Buyback

Investors are hoping for another solid earnings report after it was leaked that Rolls-Royce plans to announce a £1.5 billion share buyback with its 2025 earnings report.

What the Market Is Looking For

• Analysts expect another strong annual increase in earnings, with EPS of 29p on £19.6 billion in sales for 2025.
• Focus on guidance, as share price growth has set a high bar for the company amid its turnaround.
• Press reports suggest Rolls-Royce will raise its 2026 buyback programme by 50% to £1.5 billion.

Solid Earnings and Shareholder Rewards

The defence firm is trading just off all-time highs set last week amid heightened geopolitical tensions over Iran, as investors expect a banner report given the company's history of beating earnings. Some of the potential announcements have already leaked, with Sky News reporting on Sunday that sources within the company said it would announce a £1.5 billion share buyback alongside its earnings. This would be a 50% increase over the buybacks it did in 2025, as the company passes on strong earnings to investors. In a sign of how the market might react to the news, the report of an upsized buyback didn't propel the stock higher, as investors have set a high bar for the company's performance.

Rolls-Royce will publish its annual report before the London market opens on Thursday and is expected to report an EPS of 29p, according to the consensus of analysts compiled by the company. That would be an improvement over the 20.3p reported last year. Sales are anticipated to rise to £19.6 billion, up from £17.8 billion a year ago. The company set high expectations with its interim results, which showed a 50% increase in operating profit and improved guidance. Traders will be keen to see further indications of growth, with a focus on the company's 2026 guidance. Analysts are predicting an EPS of 33.3p, with revenues rising to £21.7 billion.

Is the Turnaround Complete?

CEO Tufan Erginbilgic took over Rolls-Royce just over three years ago with an ambitious plan to help the aircraft engine manufacturer emerge from a very difficult situation in the wake of COVID-19, which shut down air travel. He managed to take the company from £3.8 billion in debt to having a net cash position of £1.1 billion and a £1 billion share buyback last year. Investors who stuck with the turnaround plan have been heartily rewarded, as the share price is up 13x in that time, from 103p when Ergenbilgic took the reins to its 1,336p peak a few days ago. However, that level of growth can't be maintained forever, and some analysts are starting to question whether Rolls-Royce has reached a new normal. Although demand for the company's engines and energy solutions is likely to continue to grow amid rising air travel and data centre energy demand, it will likely be at a slower pace – a pace which might be reflected in its share price.

Rolls-Royce Shy of Record Highs

Rolls-Royce has advanced over the past three weeks after flipping the prior record high at 1200p to support, closing above the upper VWAP line last week at a fresh record high of 1350p. The next resistance sits at 1370p, which aligns with the measured move projection of the prior flag pattern to 1020p, followed by the round 1400p and 1500p levels. As the lines expand, further upside may be possible, but given that RSI has waned to form a divergence, prices could revert and retest the previous record high. A break below 1250p would expose that support, alongside the middle VWAP line at 1165p, with a topping pattern opening the door to 1000p once again.

Source: SpreadEx | Rolls-Royce, Weekly Chart