Rolls-Royce Holdings PLC (LON:RR) is one of the world’s most famous engineering companies and the world’s second-largest maker of aircraft engines and marine propellers. The company is listed on the London Stock Exchange and is a member of the UK’s FTSE 100 Index. So, do you want to buy Rolls-Royce shares?
This guide will walk you through everything you need to know before you invest in Rolls-Royce. This includes the company’s history, the elements that make Rolls-Royce shares an attractive buy, the best UK share brokers and how to buy Rolls-Royce shares today!
Table of Contents
How to Buy Rolls-Royce Shares in 3 Simple Steps
In a hurry and no time to read? Don’t worry. The following 3 simple steps are all you need to buy Rolls-Royce shares quickly!
Step 1: Create a broker account
To buy Rolls-Royce shares, choose a trusted broker that offers shares on the LSE, such as eToro.
Step 2: Fund your account
Fund your eToro account with a bank card, transfer or e-wallet, such as PayPal or Neteller.
Step 3: Buy Rolls-Royce shares
Search for Rolls-Royce shares, choose how much you want to invest and confirm the order.
75% of retail investors lose money when trading CFDs with this provider.
Where To Buy Rolls-Royce Shares
Before you can buy Rolls-Royce shares, you need to find a suitable UK stockbroker, and there are many to choose from. All stockbrokers differ in terms of the shares they offer, fees and tools, so finding the right one for you isn’t always easy.
To help you out, we’ve reviewed the best brokers that allow you to buy shares in Rolls-Royce.
1. eToro - Market Leading Social Trading Broker
eToro is our pick for the number one place to buy shares in the UK. For starters, this broker offers more than 800 global shares, including Rolls-Royce. It also gives you the option to buy shares in the traditional sense of trade CFDs, so you can choose to go short and trade shares with leverage if you wish.
When it comes to fees, eToro is one of the most competitive brokers around. There’s no commission, spreads are tight and withdrawals are just $5. If you can’t afford to invest in a whole Rolls-Royce share, you can buy fractional shares for a smaller amount.
This broker is well known as a pioneering social trading platform, which means it allows you to interact with other users like you do on social media. On top of that, eToro offers fantastic copy trading tools that allow you to copy the entire portfolios of top investors!
You can get started with a $200 deposit, which you can make via bank card, transfer or e-wallet like PayPal. eToro is an FCA-regulated broker, so you can buy shares in confidence. Finally, it’s also a great choice if you want to buy shares on the go, thanks to the eToro mobile investment app.
- Copy Trading: Mimic professional traders’ positions
- Global Shares: Trade more than 800+ global companies
- 100% Commission Free: Competitive spreads for share trades
- Trustworthy: FCA regulated
- High CopyPortfolio Minimum: $5,000
2. Plus500 - CFD Broker with Share Price Alerts
Plus500 is a UK-based CFD broker. This means that, unlike eToro, you can’t own shares in the traditional sense, but you can go short and trade share CFDs with 1:5 leverage. All this can be done at low cost, as Plus500 doesn’t charge commissions or withdrawal fees, and it boasts some of the most competitive spreads in the industry.
This broker has a very user-friendly proprietary platform that boasts some useful features and tools. These include custom price alerts that can be sent to your mobile via the Plus500 app, meaning you can easily keep track of the Rolls-Royce share price and never miss and investment opportunity.
You only need to deposit £100 to get started with this FCA-regulated broker, which is a fairly low amount in comparison to other brokers. There’s a variety of ways to fund your account, including e-wallets like PayPal, which is another benefit of trading shares with Plus500.
- Price Alerts: Catch the next pullback for trading
- Leverage: Trade share CFDs at up to 20:1
- Beginner-friendly: Easy to use trading platform
- Limited Analysis: No backtests or custom technical indicators
3. Capital.com - UK Broker with AI-Based Trading Bot
This broker is based in the UK and offers CFDs for a wide range of financial instruments, including shares. This broker is a particularly great choice for new investors due to its fantastic education resources, which include webinars and even a mobile app dedicated to trading education.
Another notable aspect of Capital.com is its highly advanced trading platform that utilises artificial intelligence. When trading with this broker, you can access an AI trading bot that helps you develop your strategy and find trading ideas. The platform also includes a number of other tools, such as advanced charts with over 75 technical indicators.
When it comes to trading share CFDs, Capital.com doesn’t charge any commission and the spreads the also very competitive. This broker is licensed by the FCA, in addition to CySEC, so you can be sure it’s a safe and trustworthy platform.
- AI Trading: Use a trading bot to find new ideas
- Trader Education: Includes education-based mobile app
- Low Fees: No withdrawal fee and low inactivity fee
- No Backtesting: Doesn’t enable you to test out your trading strategy
4. FinmaxFX - CFD Broker with High Leverage and MT5
FinmaxFX is an overseas broker licensed in Vanuatu. The reason this is significant is that it means FinmaxFX isn’t restricted to the same limits as European brokers when it comes to leverage. So while the likes of Plus500 cap share trading leverage at 1:5, FinmaxFX offers up to 1:20 leverage!
This CFD broker offers more than 180 global shares, including Rolls-Royce. The majority of these shares are from Europe and the US, though there are also some popular Asian companies. In addition to shares, FinmaxFX offers forex, cryptocurrencies, commodities, and share indices.
Trading with this broker takes place on the MetaTrader 5 platform, meaning you have access to a vast array of advanced trading tools. One thing to note about this broker is that its spreads are on the high side, though it doesn’t charge any commissions. There’s also a withdrawal fee of up to 3% to consider.
- Mobile Trading Apps: For iOS and Android devices
- Includes MetaTrader 5: Advanced indicators, trading signals, and backtesting
- 180 Global Shares: Trade popular US, European, and Asian companies
- High Spreads: Higher than average for shares
Why Buy Rolls-Royce Shares?
Rolls-Royce has faced some trouble recently but remains one of the world’s most admired and best-known engineering companies. The growth and profitability of its core divisions are encouraging, and Rolls-Royce should be able to recover once the aviation business picks up again.
Deciding which shares or stocks to buy is never an easy decision, and it must be the result of thorough personal research. Nonetheless, to help you in the process, we list below the main reasons in favor of buying Rolls-Royce shares.
1. Unparalleled technical knowledge and franchise
Rolls-Royce Holdings is one of the world’s most admired engineering companies, building engines and systems powering commercial and combat planes, helicopters, submarines and nuclear power plants. The technical expertise, the giant £60 billion backlog of orders and the web of contracts and relationships developed over the past 100 years offer Rolls-Royce a strong competitive advantage in its domain.
One of the main pillars of value investing is to look for a “moat”, i.e. a franchise or business model that it so hard to imitate that it can help generate superior long-term returns. While Rolls-Royce is suffering from the coronavirus crisis in the short-term, the power of its brand and know-how will keep pushing the company forward.
2. Strong liquidity to weather the crisis
While Standard & Poor’s downgraded Rolls-Royce from investment grade to junk, the company delivered an update saying it had drawn its lines of credits and added to its reserves to build a £6.7 billion cash pile.
With $500 million debt coming due in 2020 and only €750 million due until 2024, Rolls-Royce does not appear at risk of default. While its Civil Aerospace division risks to burn through significant amounts of cash, a 9,000-person layoff and capital expenditure control plans should help the company run until the aviation sector picks up again.
3. A potentially lucrative bet on the recovery of the aerospace sector
While Rolls-Royce’s Power Systems and Defense divisions have held steady during the Covid-19 crisis, Rolls-Royce shares fell over 50% since February on fears about the Civil Aerospace division’s woes.
Indeed, Rolls-Royce’s main operating segment experienced a slowdown both in the number of new engines sold to commercial airplanes and jets, but also on the demand of maintenance services for existing engines.
Nevertheless, with shares of the iconic engine-maker at a 10-year low, Rolls-Royce has the potential to display explosive returns should the aviation sector come back to normal faster than anticipated. While this may represent a risky bet, the upside could be sizable given how (relatively) cheap Rolls-Royce shares have become. At the time of writing, the average analyst consensus hovered around 975p, with Goldman Sachs reaffirming its “Buy” rating with a price target at 528p.
About Rolls-Royce Shares
Company History & Business Model
Rolls-Royce Holdings plc is a UK-based multinational engineering company established in 1904. It is headquartered in London, is listed on the London Stock Exchange and is an integral component of the UK’s FTSE 100 Index.
Unlike its eponymous but distant cousin Rolls-Royce Motor Cars, Rolls-Royce Holdings (simply “Rolls-Royce”) does not manufacture cars. Instead, it specializes in manufacturing aircraft engines and marine propellers. In 2019, Rolls-Royce holdings was the 24th largest defense contractor in the world with over £4.6 billion in defense contract revenues.
In 2019, Rolls-Royce’s continuing operations generated £15.5 billion in revenues (up 7% year-on-year), £2.3 billion in gross profits (+5%) and £810 million in operating profits (+28%). At year-end, it had a £61 billion order backlog and employed over 51,000 people in 50 countries.
Rolls-Royce operates in 3 major segments making up 93% of its revenues: Civil Aerospace (51% of 2019 revenues), Power Systems (22%) and Defense (20%).
The Civil Aerospace segment manufactures aircraft engines for large commercial planes, jets and various smaller aircraft. In 2019, the segment generated £8.1 billion in revenues (+10% year-on-year) and £44 million in operating profits, a net improvement over the negative margins of the prior year.
The Power Systems segment develops and sells engines and propulsion systems for the marine, defense, power generation (including civil nuclear power plants) and industrial markets. Over two-thirds of the segment’s revenues (£3.5 billion, +3% from 2018) were in original equipment manufacturing, the rest derived from maintenance & services. Operating profits were up significantly, with a 13% growth bringing them to £360 million in 2019.
Last, the Defense segment is a leader in engines for military transport, patrol & combat aircraft, helicopters and naval vessels. Among other high-profile contracts, the division supports the nuclear power plant of the Royal Navy’s submarine fleet. The segment’s revenues of £3.2 billion (+4% year-on-year) came from an equal mix of manufacturing and maintenance, and the operating margins remained healthy at 12.8% despite a 0.9% decline from 2018.
Rolls-Royce Share Price History and Performance
Rolls-Royce shares are listed and traded on the London Stock Exchange under the LON:RR ticker.
The coronavirus crisis has hit Rolls-Royce shares hard, sending them sharply down from their January 2020 levels. In addition to a general economic slowdown, Rolls-Royce’s Civil Aerospace segment experienced a fall in demand from commercial aviation clients for new engines and for related maintenance services. Despite steady and as-expected results from the Power Systems and Defense segments, Standard & Poor’s downgraded Rolls-Royce from BBB- to BB, bringing the engineering giant from investment grade to junk status.
Nonetheless, profits from continuing operations remained positive, and the company managed to shore up its balance sheet by drawing its revolving credit facilities, giving it a £6.7 billion cash pile to weather the storm. Further, Rolls-Royce took the difficult but financially sound decisions to cut its upcoming dividend and to lay-off over 15% of its workforce as part of its plan to conserve cash and return to profitability.
How To Buy Rolls-Royce Shares Using eToro
Step 1: Search for Rolls-Royce Holdings (RR.L) shares
On the eToro platform, use the search function to look for Rolls Royce or its ticker “RR.L”. In the search results, you will also see the names of other traders: the ability to browse other market participants is a key feature of eToro’s popular social trading platform.
Step 2: Click “Trade” to get started
Once you’re on the Rolls-Royce company page, you can browse the company’s newsfeed on eToro, its recent financials, and its share price performance.
Using your own money or eToro’s free demo account (for paper trading), click “Trade” to open the trading window and specify your order direction, type, amount, and any other options.
Step 3: Choose how much to buy and the options you want
Once you have done your research, understood Rolls-Royce’s business and the risks, you’re ready to place a trade.
In the trading window, you will first specify whether you wish to buy or short-sell Rolls-Royce shares. You can then choose how much to buy, in dollar amount or number of shares. eToro allows you to buy shares directly with no commissions when placing buy orders without leverage. If your order involves fractional shares, is short or is leveraged, eToro places it as a CFD trade.
The default order type is for the market rate. eToro also lets you place limit orders and offers options including leverage and special order types (stop-loss and take-profit).
Before placing your trade, make sure to review the exposure (in dollar amount and as a proportion of your equity) and the fees (for CFD trades). Once all this is done, you are ready to buy Rolls-Royce shares!
Simply click “Open Trade” (or “Set Order”) outside trading hours to get started!
Should I Buy Rolls-Royce Shares?
In this guide, we showed you where & how to buy Rolls-Royce shares, reviewed the company’s history and business model, and explored some of the main reasons to buy Rolls-Royce shares. As an engineering giant with a unique franchise, a large backlog of contracts and strong liquidity, Rolls-Royce remains an attractive company despite the recent developments.
If you want to buy Rolls-Royce shares today, we recommend doing so on our recommended UK broker, eToro. With 0% commission, excellent copy trading tools, and over 800 global shares, eToro is a fantastic broker. Simply click the link below to get started today!
eToro: Buy Shares with 0% Commission
- Buy over 800 global shares
- No commission and tight spreads
- Social and copy trading tools
- Accepts PayPal
- FCA regulated
Where is Rolls-Royce listed?
Rolls-Royce Holdings PLC is headquartered in London and listed on the London Stock Exchange.
What's the difference between Rolls-Royce Holdings and Rolls-Royce Motor Cars?
Rolls-Royce holdings is an engineering company that manufacture aircraft engines and power systems. It owns the rights to the Rolls-Royce name and logo, but licenses it to Rolls-Royce Motor Cars, a carmaker and wholly-owned subsidiary of German company BMW.
What business is Rolls-Royce in?
Rolls-Royce is composed of 3 major segments that represent 93% of 2019 revenues. Civil Aerospace makes and maintains engines for commercial planes and jets. Power Systems makes and maintain engines and systems to for the marine, defense and power generation (including civil nuclear) industries. Defense makes and maintains engines for combat planes, helicopters and navy vessels, including the Royal Navy's fleet of nuclear submarines.
Beyond your guide, what should I look for before buying Rolls-Royce shares?
We strongly recommend that you carefully read Rolls-Royce's annual reports, review its press commentary and listen to what analysts have to say to form your opinion. Make sure you understand well the business model and the risks before buying Rolls-Royce shares!
Can I buy fractional shares of Rolls-Royce?
Many of the brokers reviewed in this article allow you to buy or short fractional shares of Rolls-Royce, usually via CFDs.
Does Rolls-Royce pay a dividend?
Rolls-Royce has cut its dividend in light of the expected coronavirus-induced headwinds on its Civil Aerospace division. At the time of writing, there was no indication of intentions by the company to pay a dividend again in the near future.