London, June 27, 2026, 14:06 BST
- Trading in London is closed on Saturdays. On Friday, Rolls-Royce Holdings plc ended down 1.8% at 1,406.20p and the FTSE 100 slipped 0.21%.
- The stock has risen 22.3% this year, up 47.4% from a year ago. Shares eased 0.1% in the last week and trailed the FTSE 350 by 1.4 points.
- Company figures suggest data centres made up over £2.1 billion of 2025 Power Systems revenue. That makes the AI-power trade a real earnings factor, not just a side story.
- With a £118.7 billion market cap, analysts see consensus free cash flow hitting £5.15 billion in 2028. That’d put free cash flow yield near 4.3% if it happens.
Rolls-Royce Holdings plc (LON:RR) gave up ground on Friday, losing 1.8% to close at 1,406.20p. Shares hit a new 52-week high of 1,532.60p Thursday before reversing. The move left investors questioning how much near-term cash growth is already baked in. The FTSE 100 slipped 0.21% to 10,508.02.
Shares kept their uptrend after the recent pullback. A London Stock Exchange/FTSE Russell tear sheet out June 26 shows the stock up 11.7% over the 50-day average and 16.7% above the 200-day, with RSI at 63.32. That’s still under the 70 threshold often flagged for overbought, but after a 22.3% gain this year there’s less margin if sentiment turns.
Data centres now make up a major chunk of Rolls-Royce’s Power Systems revenue, based on numbers from Friday’s Power Systems teach-in. Power Systems booked £4.892 billion for 2025 revenue. Of that, Power Generation was 54%, and data centre sales were over 80% of the Power Generation figure. So, data centres brought in more than £2.1 billion for Power Systems last year, working out as more than 10% of underlying revenue for the group.
That matters since Power Systems isn’t just a low-margin add-on for widebody engines now. The unit posted a revenue jump, up from £3.3 billion in 2022 to £4.9 billion in 2025. Operating profit rose, too, going from £0.3 billion to £0.9 billion. Trading cash flow climbed from £0.2 billion to £0.7 billion, the company’s slide deck shows.
Rolls-Royce shared a capacity map and told investors it wants to double Power Generation capacity and boost Governmental by 150% between 2022 and 2028. Extra capacity is planned for the US and Germany. The risk is clear: the valuation now hangs on whether that added capacity actually drives orders, cash, and margin.
Power Systems’ 2025 margin is forecast at 17.4%, according to the same deck, with 2028 targeted in the 18%-20% range. Management showed Power Generation and Governmental as the main swing factors, each with about 20% a year in original-equipment revenue growth on a mid-term view.
Rolls-Royce’s Civil Aerospace unit is still what backs the stock. In the April trading update, CEO Tufan Erginbilgic called the first part of this year “a strong start” and stuck to 2026 forecasts of £4.0 billion to £4.2 billion in underlying operating profit. Free cash flow guidance stayed at £3.6 billion to £3.8 billion. First-quarter figures showed large engine flying hours at 115% of what they were in 2019. Deliveries of large engine original equipment gained 18%, and large engine shop visits went up 12%.
Capital return is big, but still not enough to justify the multiple. Rolls-Royce set out a buyback of £7 billion to £9 billion for 2026 to 2028, starting with £2.5 billion in 2026. With the company’s latest market value at £118.7 billion, the full programme amounts to about 5.9% to 7.6% of outstanding shares over three years and 2.1% for this year.
Analyst consensus from 12 submissions last month shows estimated free cash flow at £3.734 billion for 2026 and £5.150 billion for 2028. On the current market cap, that works out to free cash flow yields of roughly 3.1% in 2026 and 4.3% in 2028.
Investors Chronicle price-target data has 17 analysts with a median 12-month target at 1,400p, just under the current price. Estimates range from 1,101p to a high of 1,740p. The stock now leans more on optimistic calls than it did earlier in the rally.
Rolls-Royce’s financial calendar puts 2026 half-year results on July 30. That leaves the coming week with no results event for the stock, which just hit a new high last week before pulling back.
