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Rolls-Royce (LSE:RR) shares have gone nowhere for a month now. And while four weeks is like the blink of an eye for a long-term investor, I’m wondering whether shareholders might be in for a dry spell moving forward.
Then again, I thought that six months back and the stock has since advanced another 23%, easily beating the FTSE 100‘s 13% rise. It’s been a fool’s game to doubt Rolls-Royce since mid-2022.
Instead, it has been a wise move to buy shares while they were taking a breather, especially just before an earnings release. And that’s where we are now, with Rolls-Royce due to report FY25 results on 26 February.
So, should I buy more shares before next week? Let’s find out.
What does recent history say?
Back in February 2024, CEO Tufan Erginbilgiç reported a “step-change in performance“, with FY23 underlying operating profit of £1.6bn beating guidance. The share price ended the day around 8% higher, and it was a similar story in August for the half-year update.
The biggest jump came in February 2025 when the stock rocketed 16% to 731p after the engine maker reported full-year profit of £2.5bn and announced a £1bn share buyback.
Crucially, the company revealed it was hitting its mid-term financial targets two years ahead of schedule. This was one of the largest single-day gains in the company’s history.
Rolls-Royce stock was at it again in July last year when it rose around 8%, jumping above the symbolic 1,000p mark. It has never looked back since and today sits at 1,280p.
Priced for perfection
Clearly then, recent history shows that Rolls-Royce tends to move dramatically upwards straight after key earnings releases.
By contrast, some shares have a habit of falling straight after a report before recovering over time as investors digest the contents. Others get a shrug of the shoulders from investors (often businesses with very predictable earnings).
However, it’s worth noting Rolls-Royce’s Q3 trading update in November. Despite management confirming that business was strong and reaffirming guidance, the shares fell 2.5% afterwards.
So, for the first time in a long while, the market sold the news and booked some profits. With the share price now flirting with 1,300p, this could happen again next week, assuming Rolls-Royce doesn’t smash earnings like in previous years. This obviously gets harder to do each time.
My fear is that expectations are high and management may not satisfy them. I hope I’m wrong, of course, but the stock is trading at 39 times forward earnings. At this price, only perfection will do and that’s not guaranteed.
Waiting for dips
What I’m going to do then is nothing. I’ll keep holding my shares because I’m still bullish on the long-term growth opportunities.
To give one example, Erginbilgiç just met with India’s leader Narendra Modi to unveil a massive expansion roadmap across defence, energy and civil aviation. This will involve co-developing an engine for India’s next-generation combat jets.
Obviously India is a large market opportunity, as is the wider Asian region. Then there are small modular reactors (SMRs), which look necessary to meet net zero targets and soaring electricity demand.
However, with Rolls-Royce near an all-time high and pricey, I’ll wait for a dip before considering buying more shares. Perhaps we’ll get one next week.
