We’re in the final stages of the Trent 1000 fan blade issues remaining a problem. The market has penalized the company by £17 billion (125% of the market cap) given the issues.
70% of the company’s civil aerospace business is entering the cash-generation phase of the life-cycle with hefty ramps already taking place.
Rolls is on course to continue taking market share in the industry, from a much stronger base in mid-2020s.
We outline all of the bear theses, only 1 of which concerns us. Recent data and disclosures provide additional comfort that this risk is ebbing.
The roadmap ahead is quite compelling, with FCF in the process of increasing between 3-5x over the next 3 years. Regardless of a re-rating, we expect material upside.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.