Rolls-Royce jumps 6% after aerospace giant boosts profit outlook, plans up to $12 billion share buyback

Rolls-Royce said Thursday it expects profits of over £4 billion ($5.42 billion) this year as the aero engine and power systems maker banks on another year of robust growth. 

The aerospace giant is targeting underlying operating profit of between £4 billion and £4.2 billion in 2026, above the midpoint of £3.65 billion as expected by analysts polled by FactSet. It expects free cash flow of between £3.6 billion and £3.8 billion this year, also above expectations. 

It also announced that £2.5 billion of share buybacks would be completed this year as part of a multi-year buyback program of between £7 billion and £9 billion ($12 billion), citing a strong balance sheet.

Shares rose 6.4% in early trading on Thursday, on track for a record high.

Based on the bullish outlook, the company now expects to deliver profits within the prior mid-term guidance range two years earlier than planned, CEO Tufan Erginbilgic said. 

“Our transformation continues with pace and intensity,” he said in a statement. 

The British company upgraded its 2028 targets to £4.9 billion to £5.2 billion in underlying operating profit, an operating margin in the range of 18% to 20%, and free cash flow of £5 billion to £5.3 billion. 

Rolls-Royce shares have been on a tear over the past few years amid growth in all three of its businesses: civil aerospace, defense, and power systems. Over the past 12 months, the stock has more than doubled as the company has thrived amid a transformation plan launched by Erginbilgic, which has boosted investor confidence.

In 2025, underlying operating profits jumped over 40% to £3.46 billion, beating FactSet estimates of £3.32 billion. Underlying revenue in the year rose 12% to £20.1 billion.

The beat-and-raise quarterly report was described as a “high quality release” by Jefferies analyst Chloe Lemarie, who also noted that profits were driven by the power systems business.

The unit, which is benefitting from the mass build-out of data centers that rely on Rolls-Royce’s power generation system, generated £4.89 billion in revenue in 2025, reflecting an organic growth of 19% year-on-year.

Its civil aerospace business, which sells engines to Boeing and Airbus, grew 15% compared to last year, while defense grew 8%.