Does Rolls-Royce's Jet Engine Momentum Seem Built to Last?

Core Insights - The growth in global air travel and rising defense spending are driving demand for advanced jet engines, benefiting Rolls-Royce Holdings plc (RYCEY) [1] - RYCEY's Trent family of engines plays a major role in widebody aircraft programs, particularly in the commercial aviation sector [1][9] Commercial Segment - RYCEY's Trent XWB powers the Airbus A350, recognized as one of the most efficient widebody aircraft [2] - Airlines are investing in fuel-efficient engines to modernize their fleets and lower operating costs, leading to strong demand for RYCEY's Trent 1000 and Trent 7000 engines [2] - The Civil Aerospace business delivered double-digit revenue growth in the first half of 2025, supported by a large order backlog of over 2,000 engines in the widebody segment as of July 2025 [3][9] Defense Segment - Rolls-Royce manufactures engines for military aircraft, including the EJ200 for the Eurofighter Typhoon and engines for the C-130J Super Hercules and V-22 Osprey [4] - Increased geopolitical tensions and rising European defense spending are expected to sustain demand for these defense engines in the long term [4] Strategic Partnerships - In September 2025, Rolls-Royce expanded its partnership with Avio Aero and IHI to develop next-generation fighter engines under the Global Combat Air Programme, highlighting its role in future combat air propulsion technology [5] Industry Comparisons - Other jet engine manufacturers like GE Aerospace and RTX Corporation are also experiencing solid order flows due to the same demand trends [6] - GE Aerospace signed an extended services agreement with Silk Way West Airlines for various Boeing aircraft [6] - RTX secured contracts totaling $730.2 million for the F135 propulsion system supporting the F-35 Joint Strike Fighter program [7] Stock Performance - RYCEY shares have surged 124.5% over the past year, outperforming the industry's growth of 36.6% [8] - The company's shares are trading at a relative discount, with a forward 12-month Price/Earnings ratio of 36.51X compared to the industry's average of 48.05X [10] - The Zacks Consensus Estimate for RYCEY's earnings for 2025 and 2026 has improved over the past 60 days [11]