Rolls-Royce or Boeing: Who Leads the Engine Race in 2025?

Core Insights - The global aviation industry is experiencing growth driven by increased aircraft deliveries, expanding airline fleets, and rising demand for fuel-efficient jet engines [1][3] - Rolls-Royce and Boeing are leading players in the aerospace sector, focusing on propulsion technologies, sustainable aviation, and aftermarket services [1][2] Company Overview: Rolls-Royce - Rolls-Royce is transforming to enhance efficiency and develop hybrid-electric propulsion systems [2] - The company reported a 17% year-over-year increase in sales from its Civil Aerospace segment in the first half of 2025 [6] - Rolls-Royce ended June 2025 with cash and cash equivalents of approximately $7.95 billion and gross debt of $4.64 billion, indicating a solid solvency position [4] Company Overview: Boeing - Boeing is advancing its leadership through innovations in aircraft design, engineering, and maintenance solutions [2] - The Boeing Commercial Airplanes division reported a 63% year-over-year rise in revenues for the second quarter of 2025 [6] - As of June 30, 2025, Boeing had cash and cash equivalents of $22.97 billion, with long-term debt totaling $44.60 billion [5] Growth Drivers - The recovery in global air passenger traffic has fueled demand for jet engines and related services, benefiting both companies [6] - Rising global demand for defense equipment has also supported revenue growth, with Rolls-Royce reporting a 1% increase in defense revenues and Boeing's defense segment seeing a 10% rise [7] Competitive Positioning - Rolls-Royce benefits from a strong position in widebody aircraft engines and a diversified portfolio, including marine propulsion technologies [8] - Boeing holds a dominant position in the global commercial aircraft market, excelling in advanced aerostructures and digital flight systems [8] Financial Performance and Estimates - The Zacks Consensus Estimate for Rolls-Royce's 2025 sales and EPS implies improvements of 27.8% and 50%, respectively [13] - Boeing's 2025 sales estimate suggests a year-over-year growth of 29.5, but its near-term estimates have declined over the past 60 days [14] Stock Performance - Rolls-Royce has outperformed Boeing over the past year, with a stock increase of 105.8% compared to Boeing's 38.8% [16] - Rolls-Royce is trading at a premium with a forward price/sales ratio of 4.49X, while Boeing's is 1.80X [17] Final Assessment - Both companies are well-positioned for long-term growth in the aerospace industry, but Rolls-Royce appears better positioned for stronger performance in 2025 [19][20] - Rolls-Royce's focus on widebody aircraft engines and sustainable technologies enhances its growth prospects, while Boeing faces challenges related to supply-chain disruptions [20][21]