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Yahoo
an hour ago
- Yahoo
The Rolls-Royce share price smashed its own record this week. Is it too late to buy?
Well, it turned out that I was right about Rolls-Royce (LSE: RR). I had previously written that the already-soaring Rolls-Royce share price might go even higher if the aeronautical engineer announced it was performing well and raised its targets yet again. Hey presto, in its interim results over the past week the company did just that. The Rolls-Royce share price jumped to a new all-time high. Its rise has been staggering. Up 80% already this year, the FTSE 100 share is now 1,234% higher than five years ago. Compare that to the 55% gain in the index over that period and the scale of Rolls' achievement comes clearly into view. I have missed out on the recent gains after selling my Rolls shares a while back. Might now be the time to add them back into my portfolio? Strong business performance The share price jump did not come out of nowhere. For the first six months of the year, Rolls reported a pre-tax profit of £4.8bn. That represented a massive jump from £1.4bn for the equivalent period last year. The company's own measure is underlying pre-tax profit, which came in at £1.7bn. That was much smaller than the statutory figure, but still significantly higher than the prior year figure of £1.0bn. Either way, Rolls' profitability leapt. In the company's own words, the period saw 'significant year on year improvement across all key financial metrics'. But the Rolls-Royce share price did not leap to a new all-time high just because of strong performance to date, some of which I think was already priced in. Part of the surge reflected what I had previously identified as a possible driver for the share price – another hike to the company's performance targets. It lifted this year's underlying operating profit goal from £2.7bn-£2.9bn to £3.1bn-£3.2bn. Free cash flow for the year is now forecast to come in at £3.0bn-£3.1bn, up from £2.7bn-£2.9bn previously. This company's on fire! I must admit, I am impressed. Under its current management, Rolls-Royce has not only set challenging financial targets, it has also been able to deliver on them – and raise them. Can it keep doing so? The wind is in Rolls' sails. As its results demonstrated, civil aviation demand is high both for initial sales and servicing. Power systems demand is also high, with revenues in that division growing by a fifth year-on-year. Meanwhile, while the firm's defence division reported year-on-year revenue growth of only 1%, demand from Western governments is high and I expect that business to grow more in coming years. Still, the surging Rolls-Royce share price means the firm now commands a market capitalisation of £90bn. To me that looks high. The company's performance has transformed – but some of its underlying market dynamics have not. In the key civil aviation market, we know from experience that a sudden unexpected event like a pandemic or terrorist attack can see demand collapse overnight. I do not think that risk is reflected in the current Rolls-Royce share price so will not be investing. The post The Rolls-Royce share price smashed its own record this week. Is it too late to buy? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Yahoo
an hour ago
- Yahoo
Market moves past trade deal euphoria—Morgan Stanley dives into what comes next
-- Trade war fears may no longer be dominating the spotlight, but beneath the surface, the global trade regime remains a moving target, with new deals, shifting deadlines, and policy lags fueling persistent uncertainty for businesses and investors alike. But as markets celebrate recent U.S. deals with the EU and Japan, the tariff story is far from over—a reality set to linger well into year-end and beyond, Morgan Stanley analysts warned in a recent note. "Tariffs are likely to remain a moving target. Deals that have been announced lack clarity or legal foundations, making it hard to assess their longevity," Morgan Stanley analysts said, warning that announced agreements often 'lack a legal structure, legislative process, and sector details... raising key questions, especially for businesses trying to invest' Baseline Trajectory: Higher but Volatile Tariffs into Year-End Morgan Stanley's expects a 'steady baseline of ~10-15% tariffs,' with higher rates reserved for China (potentially 20-45%). The analysts stress the volatility and execution risks remain as recent headline agreements remain 'difficult to implement and track.' 'Trade policy uncertainty in the aggregate is still high, with the potential for future frictions as these agreements are difficult to implement and track,' they added. Current Tariff Landscape: Hard to Pin Down Despite a flurry of deals, 'the post-August tariff landscape remains broadly consistent with our base case. Though, we caution that tariff levels remain difficult to pin down with precision because of volatility in import shares, compliance rates under USMCA, and the inherent lag in shipping data,' The EU deal, in particular, 'seems to have raised tariff levels from ~10% to ~15%, contributing as much as 2 percentage points to the overall tariff rate on US imports,' especially as pharma and semis lose exemptions. Tariffs Showing Up in Data—With a Lag The actual impact of tariffs is only just beginning to filter into the numbers. May's U.S. import data reflected an effective tariff rate of just 8.3%, but analysts expect 'convergence in June and July to a mid-teens effective tariff rate' as shipping delays and in-transit exemptions expire. 'We did see very clear signs of tariff-driven inflation across most goods' in the June CPI print, and Morgan Stanley expects 'tariffs to result in up to 1 percentage point level shift in prices in the coming months before subsiding as demand softens in reaction' Supply Chains Scramble in Real Time Companies aren't waiting for the dust to settle. Morgan Stanley said, pointing to material shift in supply chains to Vietnam and India. 'Material shifts to Vietnam and India are visible in recent months' across electronics supply chains, as firms react to changing tariff regimes. China's share of U.S. imports slumped to just 7.7% in May from 13.7% in 2024, but could rebound as embargo-level tariffs are relaxed. Tariffs on Mexico and Canada, meanwhile, have been lower than expected at 4.3% and 1.9%, respectively; this is likely due to a "combination of unexpectedly high USMCA compliance, significant US content in autos, and possibly lenient enforcement.' Inventory Frontloading: Not as Widespread as Feared Front-loading effects, meanwhile, were more targeted than broad-based. 'Roughly 80% of the increase in Q1 imports was driven by just seven HS6 categories including gold, pharmaceuticals, and AI-related goods... Excluding these, the cumulative excess imports compared to 2024 levels amounted to less than 2% of annual imports,' the analysts found. By May, as tariffs took hold, overall import volumes fell 5%. Sector-Specific Winners—and Losers Sectors are experiencing varying levels of impact from tariffs. 'Tariffs were highest in sectors like Fabricated Metal Products (Section 232 tariffs) and Textiles and May rates remained elevated at ~24% and ~20%, respectively. These sectors, however, account for a relatively small share of total imports. In contrast, high-volume categories such as Computers & Electronics, Chemicals & Pharmaceuticals, and fuels faced much lower tariff rates—under 10%—"dampening the aggregate inflationary impulse," the analysts added. The costs are falling squarely on U.S. importers, not exporters, and 'volumes are giving way rather than prices...[but] we are early in the tariff story, and things are very much in flux' Related articles Market moves past trade deal euphoria—Morgan Stanley dives into what comes next These Under-the-Radar Stocks Offer Better Risk-Reward Ratio Than Nvidia Surge of 50% since our AI selection, this chip giant still has great potential Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
4 hours ago
- Bloomberg
Ukraine Aims to Get All EU Financial Aid Planned for This Year
Ukraine plans to get its European reform program back on track after missed deadlines prompted the European Union to cut financial aid disbursements, said Economy Minister Oleksii Sobolev. The war-torn country wants to get €12.5 billion ($14.5 billion) from the European Union under the Ukraine facility, the financial support mechanism that aims to help keep the economy afloat amid the full-scale Russian invasion well into its fourth year.
