Rolls-Royce hits £100 billion valuation in remarkable turnaround

Rolls-Royce hit a market value of about £100.3 billion for the first time in its 121-year history, with shares climbing to as high as 1,190 pence. The milestone comes as the engineering group rides a dramatic rebound under chief executive Tufan Erginbilgic, whose turnaround strategy has reshaped investor sentiment and boosted the stock this year. The rally has helped Rolls-Royce post a roughly 110% gain year to date, underlining what investors are calling a remarkable revival for a company that once described its past performance as a “darkest hour.”

The surge has elevated Rolls-Royce into the upper echelon of Britain’s stock market. It is now the fifth-largest company on the FTSE 100 by market capitalization, behind HSBC, AstraZeneca, Shell and Unilever. Analysts at Goldman Sachs have taken a constructive view, with a price target of 1,290 pence, valuing the group at about £109 billion if achieved. That implies additional upside from current levels, even after the rally that lifted the shares well above their pre-pandemic range. An investor who put £1,000 into Rolls-Royce when Erginbilgic took charge would be worth roughly £12,700 at today’s prices, based on the current share price and market capitalization.

Since taking the helm in early 2023, Erginbilgic has steered Rolls-Royce through a sweeping overhaul intended to restore profitability and discipline after the pandemic-induced slump. He has been widely credited with transforming a company that was described as a “burning platform” into what market observers are calling a durable, multi-faceted industrial story. The leadership shift was accompanied by aggressive cost-cutting, a zero-based budgeting approach and a cultural reset focused on performance, pace and purpose. In his first year, the company reduced its headcount by about 2,500 as part of broader efficiency programs.

The rebound in Rolls-Royce’s market value tracks both the post-pandemic recovery in international air travel and an uptick in defense spending across Europe. The civil aerospace business has benefited from airlines restoring and expanding fleets, while the defense side has gained from European rearmament efforts. Rolls-Royce is a major engine supplier for commercial programs with Boeing and Airbus, and it also counts engines for fighter jets such as the Eurofighter Typhoon and the F-35 among its offerings. Beyond propulsion, the company builds nuclear reactors to power Royal Navy submarines, a line of work that sits alongside its aerospace activities as part of a broader, multi-platform portfolio.

In parallel with its core engine services, Rolls-Royce has aligned with Britain’s ambition to expand nuclear capacity through Small Modular Reactors and related energy initiatives. Executives have signaled that progress in these areas could improve cash flow in the 2030 timeframe, contributing to the company’s longer-term growth trajectory. The emerging energy strategy complements its traditional strengths and is viewed by some analysts as a key driver of value in the years ahead.

The breadth of the turnaround is reflected in market sentiment around the stock. Of the 18 analysts covering Rolls-Royce, four rate it a strong buy, nine a buy, four a hold and one a sell. Industry observers describe the shift as one of the most pronounced corporate revivals in modern British industry. Richard Hunter, head of markets at Interactive Investor, called the move “an extraordinary corporate turnaround,” noting that the stock’s surge has re-rated a business once burdened by disruption and heavy fixed costs.

Garry White, chief investment commentator at Charles Stanley, summarized the story as a rapid transformation from crisis to growth. He noted that Erginbilgic’s early actions—cost discipline, portfolio simplification and a sharper strategic focus—have laid the groundwork for a broader expansion into data-centre power systems and nuclear opportunities. White also pointed to the potential upside from Rolls-Royce’s service-based revenue model, which is linked to engine usage and maintenance rather than one-off sales, providing a more durable earnings stream as the market cycles.

Looking ahead, Rolls-Royce remains focused on profitability and strategic growth. Management has signaled a continued emphasis on high-value, technology-driven opportunities, including power solutions for data centers and nuclear energy projects, while continuing to optimize its core aerospace services. The company also faces the usual sector challenges, including legacy engine issues and global supply chain pressures, but proponents say the current valuation reflects not just a rebound in travel demand but also a more diversified, resilient business model.

In summary, Rolls-Royce’s crossing of the £100 billion milestone marks a meaningful inflection point in a saga many investors had long debated. The combination of a leaner cost base, a renewed offensive in defense and energy markets, and a favorable macro backdrop for travel and infrastructure has transformed a once-struggling turbine maker into a cornerstone of Britain’s industrial landscape. As the company pursues its profit targets for 2027 and advances its energy initiatives, the market will closely watch execution, margin recovery and the realization of cash-flow improvements promised by its multi-year strategy.