FTSE 100 favourite Rolls-Royce is on the brink of reaching its latest remarkable milestone as its shares inch towards being valued at £10 each.
The Derby-based behemoth has experienced an almost unparalleled streak of success on the London Stock Exchange since the nadir of the Covid-19 pandemic, as reported by .
The firm recently surpassed a valuation of £80bn and is now poised to see its shares trade at £10 for the first time in its history in the coming weeks. When the 1,000p price is reached, it will be double what Rolls-Royce's shares were trading at in September 2024.
The company's share price has received a boost in recent weeks after it was declared the successful bidder for º£½ÇÊÓƵ small nuclear reactors. Rolls-Royce is currently the fifth most valuable member of the FTSE 100, having recently surpassed British American Tobacco.
The only firms ahead of it in terms of market capitalisation are AstraZeneca, HSBC, Shell and Unilever. The performance of Rolls-Royce's shares will be viewed as a positive for Chancellor Rachel Reeves, who is striving to encourage more people in the º£½ÇÊÓƵ to invest in domestic stocks.
'A rare good news story in a market clouded by uncertainty'
In response to the news that Rolls-Royce's share price is approaching its latest milestone, AJ Bell investment analyst Dan Coatsworth shed light on why the FTSE 100 giant is performing so well.
Coatsworth commented: "Rolls-Royce is within a whisker of hitting £10 a share which is quite an achievement considering it was trading below £1 only three years ago."
"Investors have made a mint and they're still holding out for more, given how the shares keep rising."
"Rolls-Royce is a rare good news story in a market clouded by uncertainty. Its business turnaround efforts have been a great success, it is winning more contracts and has a tailwind from many governments committing to greater defence spending."
"Upgrades to earnings forecasts can help to drive up a company's share price and Rolls-Royce is flying high."
"Whereas a lot of companies are suffering from earnings downgrades amid uncertainty around the global economy and tariffs, Rolls-Royce's earnings estimates keep going up."
Rolls-Royce 'under pressure to keep delivering good news'
Nevertheless, Coatsworth did sound a note of caution regarding what might occur to Rolls-Royce's share price should its financial performance fail to continue meeting expectations.
He stated: "A year ago, the consensus earnings forecast for Rolls-Royce's 2026 earnings per share was 22.32p; now it is 28.93p."
"Another key driver for the shares is that investors have been prepared to pay a higher multiple of earnings to own the stock."
"That's the definition of a re-rating and Rolls is now trading on 36.3 times next 12 months' earnings versus 24.3-times last October."
"This re-rating can't go on indefinitely and it puts pressure on Rolls-Royce to keep delivering good news."
"The danger with highly rated stocks is that their shares can fall back quickly if earnings are simply in line with expectations."
"They have to keep beating expectations to warrant trading on a premium rating such as 36 times forward earnings."
