Image source: Getty Images
Rolls-Royce Holdings (LSE: RR.) shares have brought riches to a good few UK investors. The share price acceleration since the company pulled itself up from the depths of the 2020 stock market crash has been simply stunning. And it’s given many an investor a cracking multi-bagger.
But why am I looking at a specific £8,580 invested in the company in May 2025? That’s because it would now be worth a staggering £100,000. And just £858 would have grown into a cool 10 grand. At least, that’s based on the 1,186p share price at the time of writing. It might be a bit different by the time you read this.
And here’s an interesting snippet. Rolls-Royce is forecast to pay a dividend of 10p per share this year. That would mean a yield of only 0.84% on the current share price. But an investor who bought five years ago would see a 9.8% yield on the price they paid back then!
Pausing for breath?
Now, it might be verging on madness to expect the same kind of returns over the next five years. I mean, it would need another 1,046%. And that kind of thing tends not to happen too many times in a row.
Rolls-Royce shares have backed off a bit from their 2026 high too. And we’re looking at a 19.8% fall since 26 February. Just think, if the price hadn’t fallen back, that initial £8,580 could now be worth £119,750!
Does that mean the cracking growth surge of the past few years has reached its climax, and it’s all yawning boredom from now on? A couple of things suggest Rolls-Royce shares might only be taking a bit of a breather.
The dip coincides with the Middle East turmoil. Flights cancelled, fuel prices through the roof… that’s not a good combination. But I’d say the fall has been quite modest. And there’ll surely be hopes of a defence sector boost from it all.
Stunning forecasts
Then we come to analyst forecasts. Between 2026 and 2028, they predict:
- Earnings per share rising 36%
- Price-to-earnings (P/E) falling from 32 to 23
- Net cash growing 83% to £5.4bn
That doesn’t really sound to be like a company running out of steam, does it?
Oh, and the most optimistic of them sees Rolls-Royce shares climbing a further 47% — and broker targets tend to be on the short-term side too. Admittedly they’re not all as optimistic as that — there’s one sourpuss who sees the shares dropping 7%. But even the average target would mean a 19% share price rise from today.
Done and dusted?
Despite analyst enthusiasm, I put Rolls-Royce shares among the FTSE 100‘s riskiest at the moment. The main uncertainty I see is how long it might take to reach profits from small modular reactors (SMRs) — Rolls estimates not before 2030. And what will happen to profits in the few years before then?
Rolls-Royce shares are not for me, with my low-risk preference. But long-term growth investors could do well to consider Rolls if we have any further dips in 2026.
This story originally appeared on Motley Fool
