Rolls Royce share price inched 1.90% lower at 110.18p on Monday. Its total market capitalization slightly dropped to 9.28 billion pounds.
Rolls Royce Fundamental Analysis
Rolls Royce Holdings Plc (LON: RR) is the world’s fourth-biggest aircraft manufacturing company by market share, sandwiching it between Pratt &Whitney and International Aero Engines. It is most famous for its Trent 1000 engine used in Boeing 787.
The Rolls Royce share price rose on August 4, 2021, after the company confirmed the sale of its subsidiary, Bergen Engines, to Langley Holdings. RR agreed to sell its subsidiary to the UK-based industrial conglomerate company for an enterprise value of €63 million. Sale proceeds are €70 million with €40 million of cash currently held within Bergen Engines to be retained by Rolls-Royce.
The sale was followed by Rolls Royce’s interim results on August 5. The aero engines maker reported better-than-expected results for the second quarter. The company’s revenue for the first half of 2021 slipped to £5.16 billion. Its underlying operating profit was at £307 million after reporting a £1.3 billion loss in 2020.
RR’s pre-tax profits were at £114 million against a £5.2 billion deficit. The first half saw a cash outflow of £1.2 billion. According to the company’s chief executive, Warren East, engine flying hours also improved 49% of 2019 levels. RR also slashed 8,000 jobs which cut its cost base by a third.
Talks are underway to sell RR’s ITP Aero business and its shares in Air Tanker to help outstrip some of the losses in civil aviation caused by the coronavirus.
RR’s Technical Outlook
The Rolls Royce share price has been facing several twists and turns for the past two months. In July, it formed what looks like an inverted head and shoulders.
On the daily chart, it is trading above the 50 and 100-day exponential moving averages. Its Relative Strength Index (RSI) is strong. However, its 66.92 RSI is close to overbought which is bearish.
A move past the neckline at 105.20p might push the prices lower to find support at 102p. An upward bounce from the neckline will have the next target level at 128p.