Image source: Rolls-Royce plc
Over the past year, the share price of Rolls-Royce (LSE: RR) has more than doubled. Rolls-Royce shares have moved up by an impressive 117% during those 12 months.
Might the same happen in coming months? Could the Rolls-Royce share price double by the end of 2025?
A very impressive track record
At first mention, that notion might seem fanciful. After all, this is a long-established company in a mature industry.
Over the decades the industry has proven to be cyclical and Rolls’ profit and loss account has moved around substantially. Sudden unexpected drops in civil aviation demand have hammered the share before. I see that as an ongoing risk.
However, the past year has shown that Rolls-Royce shares have a lot of oomph. In fact that is a continuation of a trend that meant the share was among the best FTSE 100 performers of 2023 and 2024, as well as 2025.
That is an impressive track record, but of course in the stock market past performance is not necessarily an indication of what to expect in future.
The meteoric rise of Rolls-Royce shares – up 1,072% in five years – is also partly down to a low base. The pandemic era brought the company to its knees and the shares were selling for pennies as recently as 2022.
Right business strategy, right time
However, a low starting point does not explain why the share has performed so well in recent years.
The reality is that Rolls has always had some deep strengths, from its engineering expertise and proprietary technology to its large installed base of engines that require ongoing maintenance.
That has provided a foundation for the strong performance of Rolls-Royce shares in recent years. But a lot of that performance has been down to how the business has been doing. Management has set aggressive performance targets and consistently achieved them.
Meanwhile, the company is benefitting from ongoing strong demand in its key markets of civil aviation, defence, and power.
There’s still more potential here
So, although the share price has moved up sharply, Rolls’ earnings have also been strong.
The current price-to-earnings (P/E) ratio is 18. UK defence firm Babcock trades on a higher P/E ratio of 25, while BAE Systems is on 29.
So, Rolls-Royce shares could increase by around 60% simply by coming in line with BAE Systems’ valuation, using that metric.
A further potential driver for the share price is the prospect for earnings growth. In the medium term, the company is targeting underlying operating profit of £3.6bn-£3.9bn. That would be around 16%–26% higher than the expected figure for last year.
That is a medium-term, not short-term, target. So while it could help propel Rolls-Royce shares markedly higher, that would not necessarily happen this year.
Never say never!
However, if 2026 brings further upgraded targets then, along with the current valuation discount compared to peers I mentioned above, I see the potential for the Rolls-Royce share price to double from here.
I would be surprised at such a big gain for a company that already has a £106bn market capitalisation, though.
Even the current valuation is too high for my taste, given the risk I mentioned above of a sudden drop in civil aviation demand. So for now I will not be investing.
