ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Rolls-Royce Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2025 was 11.62%.
As of today (2026-06-24), Rolls-Royce Holdings's WACC % is 11.96%. Rolls-Royce Holdings's ROIC % is 13.85% (calculated using TTM income statement data).
Rolls-Royce Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Rolls-Royce Holdings's WACC % is 11.96%. Rolls-Royce Holdings's ROIC % is 13.85% (calculated using TTM income statement data).
Rolls-Royce Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
* 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 ROIC %, along with its competitors' market caps and ROIC % 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 ROIC % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, Rolls-Royce Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where Rolls-Royce Holdings's ROIC % falls into.
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2025) data.
The tax rate is limited to between 0% and 100%.
* 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.
Rolls-Royce Holdings (RYCEF) has a ROIC % of 11.62% as of Dec. 2025. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Rolls-Royce Holdings and its competitors.
Is Rolls-Royce Holdings' ROIC % too high?
Rolls-Royce Holdings' current ROIC % is 11.62%. The Aerospace & Defense industry median ROIC % is 4.45. Rolls-Royce Holdings' value of 11.62% is 161.1% above this industry median. 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' ROIC % compare to GE and RTX?
Rolls-Royce Holdings' ROIC % of 11.62% can be compared against companies in the Aerospace & Defense industry. The industry median ROIC % is 4.45. Rolls-Royce Holdings' value of 11.62% is 161.1% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for an Aerospace & Defense company?
The median ROIC % among Aerospace & Defense companies is 4.45, based on 351 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Rolls-Royce Holdings's current ROIC % of 11.62% is 161.1% 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 ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Rolls-Royce Holdings and its competitors. For the Aerospace & Defense industry, the median ROIC % is 4.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Rolls-Royce Holdings's current ROIC % is 11.62%. 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 ROIC % is 11.62% and 161.1% above the Aerospace & Defense industry median of 4.45. 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 ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Rolls-Royce Holdings (RYCEF), the current ROIC % is 11.62% 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:
ROIC %: 11.62%
GF Value™: $8.27 vs. price of $18.00 (117.7% above fair value)
Industry Position: 161.1% above the Aerospace & Defense median
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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