Rolls-Royce HoldingsRYCEY +0.38%70 ROE % is 110.32% as of Dec. 2025, which is 54% below its 10-year median of 242.26. GuruFocus rates RYCEY with a GF Score™ of 70/100 and a GF Value™ of $8.42 (Significantly Overvalued). The stock has 5 warning signs investors should review. Among 347 Aerospace & Defense companies, Rolls-Royce Holdings ranks better than 97.98% on this metric.
ROE % measures the rate of return on the ownership interest (shareholder's equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE % shows how well a company uses investment funds to generate earnings growth. ROE %s between 15% and 20% are considered desirable.
The factors that affect a company's ROE % can be illustrated with the three-step DuPont Analysis:
Note:
The net income data used here is two times the semi-annual (Dec. 2025) net income data. The Revenue data used here is two times the semi-annual (Dec. 2025) revenue data. The same rule applies to Pre-Tax Income and Operating Income.
* In the five-step DuPont Analysis, Operating Income is only available for non-financial companies. Thus, for Insurance companies, we use EBIT as a substitution of Operating Income. For Banks, both Operating Income and EBIT is unavailable. Thus we combined Interest Burden and Operating Margin % into Pretax Margin %, and the DuPont Analysis is divided into four components instead.
* 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.
Be Aware
Net Income is used.
Because a company can increase its ROE % by having more financial leverage, it is important to watch the equity multiplier when investing in high ROE % companies. Like ROA %, ROE % is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Asset light businesses require very few assets to generate very high earnings. Their ROE %s can be extremely high.
* 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 ROE %, along with its competitors' market caps and ROE % 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 ROE % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, Rolls-Royce Holdings's ROE % distribution charts can be found below:
* The bar in red indicates where Rolls-Royce Holdings's ROE % 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.
In the calculation of annual ROE %, the net income of the last fiscal year and the average total shareholder equity over the fiscal year are used. In calculating the quarterly data,
the net income data used here is two times the semi-annual (Dec. 2025) net income data.
ROE % is displayed in the 30-year financial page.
Rolls-Royce Holdings (RYCEY) has a ROE % of 110.32% as of Dec. 2025. Return on equity is the ratio of current-period net income to average two-period total equity. View historical data on Rolls-Royce Holdings and its competitors. This is 54% below median its historical median of 242.26. According to the industry distribution chart, Rolls-Royce Holdings ranks #7 out of 347 companies in the Aerospace & Defense industry, placing it in the top 2%.
Is Rolls-Royce Holdings' ROE % too high?
Rolls-Royce Holdings' current ROE % of 110.32% is 54% below median its 10-year median of 242.26. The Aerospace & Defense industry median ROE % is 5.91. Rolls-Royce Holdings' value of 110.32% is 1766.7% above this industry median. Based on the distribution chart, Rolls-Royce Holdings ranks #7 out of 347 companies in the Aerospace & Defense industry, which is in the top quartile — a strong position relative to peers. Overall, Rolls-Royce Holdings has a GF Score™ of 70/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Rolls-Royce Holdings' ROE % compare to GE and RTX?
According to the Aerospace & Defense industry distribution chart, Rolls-Royce Holdings ranks #7 out of 347 companies for ROE %. This places Rolls-Royce Holdings in the top 2% of its industry — outperforming the majority of peers. The industry median ROE % is 5.91. Rolls-Royce Holdings' value of 110.32% is 1766.7% above this benchmark. While the company's 10-year median is 242.26 vs. the industry median of 5.91, 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 ROE % for an Aerospace & Defense company?
The median ROE % among Aerospace & Defense companies is 5.91, based on 347 companies in the industry. Companies in the top quartile (top 25%) have a ROE % significantly above this median, while those in the bottom quartile fall well below. However, ROE % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Rolls-Royce Holdings's current ROE % of 110.32% is 1766.7% 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 ROE % mean?
A high ROE % can signal that a stock is expensive relative to its fundamentals. Return on equity is the ratio of current-period net income to average two-period total equity. View historical data on Rolls-Royce Holdings and its competitors. For the Aerospace & Defense industry, the median ROE % is 5.91 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Rolls-Royce Holdings's current ROE % is 110.32%, which is 54% below median its own 10-year median of 242.26. 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 (RYCEY) is currently considered Significantly Overvalued. The stock's GF Value™ is $8.42, compared to a current price of $18.60 — trading 120.9% above its estimated fair value. The current ROE % is 110.32%, which is 54% below median its 10-year median of 242.26 and 1766.7% above the Aerospace & Defense industry median of 5.91. Rolls-Royce Holdings' overall GF Score™ is 70/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROE % calculated?
ROE % is calculated from a company's financial statements. For Rolls-Royce Holdings (RYCEY), the current ROE % is 110.32% 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 (RYCEY) Overvalued in 2026?
Based on GuruFocus' analysis, Rolls-Royce Holdings stock appears to be overvalued.
The current stock price of $18.60 is trading 120.9% above its estimated GF Value™ of $8.42.
GuruFocus considers Rolls-Royce Holdings to be Significantly Overvalued.
Key valuation signals for RYCEY:
ROE %: 110.32% (54% below median its 10-year median of 242.26)
GF Value™: $8.42 vs. price of $18.60 (120.9% above fair value)
Industry Position: 1766.7% above the Aerospace & Defense median (#7 of 347)
No single metric tells the full story. See the RYCEY 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.
70GF Score
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