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Rolls-Royce’s (LON: RR) share price has gone nowhere in the past few months as investors wait for the next catalyst. The stock has remained between the support at 142.80p and the resistance at 157.55p. Despite the consolidation phase, the shares remain ~52% above the lowest point this year.
Airlines are doing well
Rolls Royce stock price has been in a tight range recently even as the civil aviation industry rebounds. Quarterly results by Delta Air Lines showed that revenue and earnings surged to the highest level on record. It attributed this performance to the rising transatlantic travel.
Other American airlines like American and United have reported strong results, helped by international revenue. In Delta’s case, international revenue surged by over 65%, with Pacific routes revenue rising by 175%.
Other international airlines have also recorded strong results. Singapore Airlines made a S$2.3 billion profit in the last financial year. Similarly, Cathay Pacific said that it will publish a profit for the first time since 2019.
Other companies that Rolls-Royce Holdings provides services like IAG, Lufthansa, and Qantas have also published strong results this year. In a recent note, IATA wrote that revenue will jump by 9.7% this year to over $803 billion.
Passenger revenue is expected to jump to over $546 billion while cargo’s revenue will come in at over $142 billion. Airline expenses will rise to $781 billion, leading to a net profit of over $9.8 billion.
These numbers are important for Rolls-Royce Holdings, a company that provides services to most airlines. In July, the company reiterated its belief that it will continue rising. The management hopes that its operating profit will be between £800 million and £1 billion.
It also sees its free cash flow rising to between £600 million and £800 million. Rolls-Royce also aims to reduce its net debt. Therefore, the robust state of the civil aviation industry will help to supercharge the recovery. As shown below, the company makes most of its money in the civil aviation industry.
Rolls-Royce Holdings civil aviation
Rolls-Royce share price forecast
The daily chart shows that the RR share price has moved sideways for a while. It has remained between the support at 142.80p and the resistance at 142.80p. The shares have recently moved below the 50-day moving average.
At the same time, the Average True Range (ATR) has dropped to the lowest level since February this year. This is a sign that the stock’s volatility has plunged. Therefore, the outlook for the stock will likely remain in this range as traders wait for the upcoming half-year results, which are scheduled for August 3rd.
The post As the Rolls-Royce share price stalls, is it still a bargain? appeared first on Invezz.
