Rolls-Royce HoldingsRYCEF -0.90%71 Gross Margin % is 27.72% as of Dec. 2025, which is 41% above its 10-year median of 19.71. GuruFocus rates RYCEF with a GF Score™ of 71/100 and a GF Value™ of $8.27 (Significantly Overvalued). The stock has 5 warning signs investors should review. Among 342 Aerospace & Defense companies, Rolls-Royce Holdings ranks better than 56.14% on this metric.
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Rolls-Royce Holdings had a gross margin of 27.72% for the quarter that ended in Dec. 2025 => Competition eroding margins
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Rolls-Royce Holdings Gross Margin % Related Terms
Rolls-Royce Holdings Gross Margin % Historical Data
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The historical data trend for Rolls-Royce Holdings's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Aerospace & Defense subindustry, Rolls-Royce Holdings's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Rolls-Royce Holdings Gross Margin % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, Rolls-Royce Holdings's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Rolls-Royce Holdings's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Rolls-Royce Holdings (RYCEF) has a Gross Margin % of 27.72% as of Dec. 2025. Gross margin is the ratio of total gross profit to net sales. View historical data on Rolls-Royce Holdings and its competitors. This is 41% above median its historical median of 19.71. According to the industry distribution chart, Rolls-Royce Holdings ranks #150 out of 342 companies in the Aerospace & Defense industry, placing it in the top 43.9%.
Is Rolls-Royce Holdings' Gross Margin % too high?
Rolls-Royce Holdings' current Gross Margin % of 27.72% is 41% above median its 10-year median of 19.71. The Aerospace & Defense industry median Gross Margin % is 26.65. Rolls-Royce Holdings' value of 27.72% is 4% above this industry median. Based on the distribution chart, Rolls-Royce Holdings ranks #150 out of 342 companies in the Aerospace & Defense industry, which is above the industry midpoint. Overall, Rolls-Royce Holdings has a GF Score™ of 71/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Rolls-Royce Holdings' Gross Margin % compare to GE and RTX?
According to the Aerospace & Defense industry distribution chart, Rolls-Royce Holdings ranks #150 out of 342 companies for Gross Margin %. This puts Rolls-Royce Holdings in the upper half of its industry. The industry median Gross Margin % is 26.65. Rolls-Royce Holdings' value of 27.72% is 4% above this benchmark. While the company's 10-year median is 19.71 vs. the industry median of 26.65, Rolls-Royce Holdings has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for an Aerospace & Defense company?
The median Gross Margin % among Aerospace & Defense companies is 26.65, based on 342 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Rolls-Royce Holdings's current Gross Margin % of 27.72% is 4% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Rolls-Royce Holdings and its competitors. For the Aerospace & Defense industry, the median Gross Margin % is 26.65 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Rolls-Royce Holdings's current Gross Margin % is 27.72%, which is 41% above median its own 10-year median of 19.71. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Rolls-Royce Holdings stock overvalued right now?
Based on GuruFocus' analysis, Rolls-Royce Holdings (RYCEF) is currently considered Significantly Overvalued. The stock's GF Value™ is $8.27, compared to a current price of $18.00 — trading 117.7% above its estimated fair value. The current Gross Margin % is 27.72%, which is 41% above median its 10-year median of 19.71 and 4% above the Aerospace & Defense industry median of 26.65. Rolls-Royce Holdings' overall GF Score™ is 71/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Rolls-Royce Holdings (RYCEF), the current Gross Margin % is 27.72% as of Dec. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Rolls-Royce Holdings (RYCEF) Overvalued in 2026?
Based on GuruFocus' analysis, Rolls-Royce Holdings stock appears to be overvalued.
The current stock price of $18.00 is trading 117.7% above its estimated GF Value™ of $8.27.
GuruFocus considers Rolls-Royce Holdings to be Significantly Overvalued.
Key valuation signals for RYCEF:
Gross Margin %: 27.72% (41% above median its 10-year median of 19.71)
GF Value™: $8.27 vs. price of $18.00 (117.7% above fair value)
Industry Position: 4% above the Aerospace & Defense median (#150 of 342)
No single metric tells the full story. See the RYCEF stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Rolls-Royce operates three core business segments: civil aerospace, power systems, and defense. The civil aerospace segment builds engines powering wide-body aircraft, regional and business jets, and offers aftermarket services. Twenty years ago, the firm pioneered full-service flight hour contracts with the TotalCare package. Power systems provides power solutions to multiple end markets (defense, agriculture, marine, and power generation) while the defense business provides military, ground vehicle and naval propulsion solutions.
71GF Score
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