How to trade Rolls-Royce shares

In this article, we are talking exclusively about Rolls-Royce Holdings - the multinational aerospace, defence and engineering company, and any mention of ‘Rolls-Royce’ is used in that context unless otherwise stated. If you’re looking to get exposure to the synonymous car company, you’ll need to trade BMW shares – which owns the Rolls-Royce car brand.

How to trade Rolls-Royce shares

You can get exposure to positive movements in the Rolls-Royce share price by speculating on the share price with CFDs.

Trading Rolls-Royce with CFDs means that you are speculating on the share price with financial derivatives. When trading, you won’t take ownership of the shares, but you will be able to trade with leverage – granting you full market exposure for an initial deposit.

Buying Rolls-Royce shares

1. Create or log in to your trading account and go to our trading platform
2. Choose to trade CFDs
3. Search for ‘Rolls-Royce Holdings’
4. Choose your position size
5. Select buy and monitor your trade

How to short Rolls-Royce shares

Shorting Rolls-Royce shares means that you are taking a speculative position on their price falling with CFDs. Shorting enables you to generate a profit from a falling market.

Shorting Rolls-Royce shares

1. Create or log in to your trading account and go to our trading platform
2. Search for ‘Rolls-Royce Holdings’
3. Choose your position size
4. Choose ‘sell’ in the deal ticket to go short and speculate on the price falling
5. Confirm and monitor your short position

We’ve included a screenshot from our trading platform below. It shows the change in the Rolls-Royce share price from 16 January 2020 to 15 May 2020.

Rolls-Royce shares: the basics

Rolls-Royce Holdings is listed on the London Stock Exchange under the RR ticker. The company is a constituent of the FTSE 100 stock index, which tracks the performance of the 100 largest blue-chip companies listed on the London Stock Exchange.

Rolls-Royce Holdings is the parent company to Rolls-Royce North America, Rolls-Royce AB and Rolls-Royce Deutschland. But, contrary to popular belief, it does not own the luxury car company of the same name – Rolls-Royce – which is wholly owned by BMW. So if you’re seeking to get exposure to the car company, you’ll need to invest in or trade BMW shares.

Rolls-Royce Holdings is a strong stock choice if you are seeking exposure to the aerospace, defence and engineering sectors.

The Rolls-Royce business model

The Rolls-Royce business model is based on a five-point strategy, which is bulleted below as it appears on the company website¹:

• Transform our business
• Champion electrification
• Reinvent with digital
• Vitalise existing capabilities
• Build a balanced portfolio

Overall, the five points highlighted above are designed to help Rolls-Royce deliver on their ability to be at the forefront of the aerospace industry and to continue to develop and create the latest technology that the industry relies on.

Rolls-Royce key personnel: who manages the company?

There are 14 people on the board of Rolls-Royce Holdings:

Rolls-Royce Holdings: share price analysis

You can carry out both technical and fundamental analysis on the Rolls-Royce share price.

Technical analysis looks at chart patterns and price action using technical indicators. The hope is to identify levels at which a stock might be classed as being overbought or oversold.

Fundamental analysis hopes to make sense of whether a stock is currently overvalued or undervalued by looking at company earnings, financial statements and leadership – to name a few.

For a technical analysis of the Rolls-Royce share price, you might want to turn to popular technical indicators such as the parabolic SAR, channel indicators, Williams %R, moving averages or the stochastic oscillator.

To carry out a fundamental analysis of the Rolls-Royce share price, the following metrics might be useful:

• Earnings per share (EPS) shows how much Rolls-Royce makes for each share of its stock. It is calculated as net profit divided by the total number of outstanding shares – and a high EPS could indicate that the stock is undervalued
• Price-to-earnings (P/E) ratio shows how much you would have to invest in Rolls Royce to receive £1 in profit. The P/E ratio is calculated by dividing a company’s share price by its EPS – and a low P/E ratio might show that a company’s stock is currently undervalued
• Return on equity (ROE) is the amount of income that a company is generating relative to the amount of equity it has generated through shareholder investments. ROE is calculated by dividing a company’s net income by its shareholder equity, and multiplying that figure by 100 to get a percentage

Footnotes

¹ Rolls-Royce Holdings, 2020