Rolls-Royce Shares Rally 10% off Lows To Continue Bull Trend

Rolls-Royce's share price (LON: RR) had been on the radar of many, after a huge 33% rally through the first quarter of the year. Q2 began with an 18% drop through the first week, only for the shares to again fight back, with a bounce of 10.9% into today's session. Up 2% through the early hours of trading today, could Rolls Royce shares still be at a good entry point?

The earlier blip on the chart followed the implementation of 10% tariffs on UK imports to the US, which came into effect on April 2. Despite these tariffs, Rolls-Royce maintains significant operations across 27 US states, helping to manage supply and production for American customers.

The stock has once again moved back above the 50 period SMA on the daily chart today (below in red), having previously used the level as support during the earlier run up. Whilst on the daily, the 50 SMA has proved to be more of a bounce point than the 200, the stock continues to trade above both metrics, indicating a continued period of bullishness from a technical perspective. The pullback this month bounced firmly from the 200 day SMA, which can be used as a positive sign for the bulls.

In terms of financial performance, the company saw a positive trajectory with a 16% increase in revenue, totaling £17.848 billion. Operating profit rose significantly by 55% to £2.464 billion, while free cash flow jumped 89% to £2.425 billion. Rolls-Royce has projected even more robust growth, with an operating profit and free cash flow forecasted to reach between £2.7-£2.9 billion by 2025.

Another element of shareholder value comes from the company's commitment to buybacks, with Rolls-Royce having announced a £1 billion share buyback. Analysts remain optimistic with forecasts suggesting a 3.2% annual growth in earnings by 2027.

Despite recent challenges, Rolls-Royce's solid financial gains and strategic initiatives underscore a potentially attractive investment opportunity, especially with its current valuation metrics indicating room for future price appreciation according to the analyst community, holding a consensus price target of 790. Whilst there could be further volatility on the horizon, RR appears to be holding up better than many.