Rolls-Royce share price had a strong start to the year as its three business segments boomed. RR jumped by over 70% in the last six months, making it one of the best-performing players in the FTSE 100 Index. It has soared by more than 1,000% in the past few years. So, will the bullish momentum continue in July?
Half-year results to be the catalyst
Rolls-Royce stock price will be in the spotlight this month as it publishes the half-year results on July 31st. These results will provide more color about its business and whether its momentum is continuing.
The same first-half results last year showed that its operating profit jumped by 74% to £1.1 billion, while its operating margin grew by 4.4% to 14%. This growth was spread across all segments, with the civil aerospace’s margin hitting 18% aan the defence and power systems rising to 15.5% and 10.3%, respectively.
There are signs that the company’s results will be better than expected. First, the civil aviation industry has made a complete recovery and passed the pre-pandemic levels. This means that its business is doing well because it makes most of its money in long-term service contracts, which are charged per hourly flight.
The power industry is expected to continue growing this year due to robust demand for AI. For example, the UK and Czech utilities have selected the company to provide its small modular reactors. Morgan Stanley believes that this division could generate over £10 billion annually.
Rolls-Royce is also benefiting from the ongoing defense spending, which will benefit companies in the military-industrial complex. Recently, Trump pressured NATO countries to increase their defense spending to 5%.
Many European countries have already boosted spending. The UK recently committed £20 billion into nuclear deterrence and ordered new submarines.
Rolls-Royce’s share price will also benefit as European leaders travel to China to celebrate trading ties this month. As we reported, there is a likelihood that Chinese airlines will order over 500 new Airbus planes as relations with the US sour. Many Airbus planes use Rolls-Royce engines.
Rolls-Royce share price analysis
The daily chart shows that the RR stock price has been in a strong bull run in the past few months. It has jumped from the January 1 level of 576p to nearly 1,000p, as we had predicted.
The stock remains above all moving averages, signaling that bulls are in control. It also remains above the important resistance level at 808p, the highest level in March this year.
The Relative Strength Index (RSI) and the MACD indicators have continued rising this year.
Therefore, the stock will likely continue rising as bulls target the psychological level at 1,000p. It is also likely that it will pull back after hitting that resistance level as investors start booking profits. If this happens, a drop to 950p and below may be possible before it resumes the uptrend.
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