Rolls Royce share price has been the best performer in the European stock market and the FTSE 100 index for the past 24 hours. The RR stock ended its previous trading session 23.68% higher at 133.10p. The stock has staged a strong comeback since the start of the new year, climbing more than 40% in the year to date.
RR Beats Expectations
Rolls Royce share price skyrocketed earlier on Thursday after the company announced better-than-expected full-year earnings for 2022. The company announcement saw its shares jump to their highest level since 2021.
The British engine maker recorded an underlying profit of £652 million, £238 million higher compared to 2021. The 57% year-on-year jump in its underlying profit was largely boosted by its civil aerospace and power systems. The profits were ahead of the consensus analysts’ estimates of £478 million.
Rolls Royce’s free cash flow from continuing operations came in at £505 million, £2 billion higher than the previous year, driven by a strong recovery in the engine flying hours. Net debt inched lower to £3.3 billion, down from £5.2 billion in 2021 against the backdrop of disposals and improved cash flow.
The company linked its results to the strong recovery in international travel demand, noting a 35% jump in the year-on-year large engine flying hours for civil aerospace. Rolls Royce earns maintenance revenues depending on the hours flown by the engine it makes. Engine flying hours were at 65% of pre-corona levels and are expected to rise to 80-90% this year amid the easing of travel restrictions in China.
Rolls Royce Share Price Forecast
The daily chart shows that the Rolls Royce share price has been under intense pressure for the past few days, before rocketing on Thursday. It has managed to remain above the 50-day and 200-day exponential moving averages (EMAs). Its Relative Strength Index (RSI) has moved higher, indicating a surge in buying pressure.
Therefore, the RR stock price is likely to continue nudging higher as bulls eye the next resistance level at 140p. If this happens, the next resistance level to watch will be 150p. However, a slip below the important level of 115p will invalidate the bullish thesis.