Rolls Royce Share Price Climbs on Profit Surge and a £7bn–£9bn Buyback — What the Momentum Means for Investors

The recent set of results has rewritten near-term expectations and sent the rolls royce share price noticeably higher — a reaction that matters first to shareholders and fixed-income investors watching buybacks and dividend timing. With upgraded mid-term targets and a large repurchase plan, the company’s market profile is shifting from recovery story to growth-and-return story, changing how capital allocation will be judged over the next three years.

Rolls Royce Share Price: momentum drivers and immediate market reaction

Here’s the part that matters: the combination of a near-40% jump in profits, upgraded guidance and a £7bn–£9bn share buyback program — with £2. 5bn planned for this year — is the immediate catalyst for the share move. Shares in the FTSE 100 company rose 6% on Thursday morning and the stock has risen 120% over the past year. The company also set upgraded mid-term targets for underlying operating profit of £4. 9bn–£5. 2bn and free cash flow of £5. 0bn–£5. 3bn, signaling higher long-run cash returns.

Key financials and payout details (embedded)

Financial highlights for 2025 include an underlying operating profit of £3. 46bn, up 38% year-on-year on an organic basis, and basic earnings per share of 29. 55p, up 46%. Free cash flow ended the year at £3. 27bn, which was £845m higher than the prior year. Revenue was £20. 06bn, up 14% on 2024.

• Civil aerospace revenue: £10. 38bn, up 15%.
• Defence business revenue: £4. 77bn, up 8%.
• Power systems revenue: £4. 89bn, up 19%.

The company declared a final dividend of 5p per share, taking the total for the year to 9. 5p (58% higher than 2024). The dividend will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026, and shareholders will be offered a dividend reinvestment plan (see note 7, page 34). In 2025 the Group recognised a £277m credit to underlying profit after tax in respect of deferred tax assets on UK tax losses; this £277m credit has been adjusted in the calculation of earnings per share, the proposed dividend payout ratio, and return on capital (see note 5, page 33). All underlying income statement commentary is provided on an organic basis; a reconciliation of alternative performance measures to their statutory equivalent is provided on pages 52 to 55. Adjusted return on capital is defined on page 55.

Strategy, operations and company positioning

The company describes its role as developing and delivering complex power and propulsion solutions for safety-critical applications in the air, at sea and on land, and says its products and service packages enable customers to connect people, societies, cultures and economies. The strategic framework is founded on four strategic pillars. Over the past three years, including 2025, the business says it has made significant progress across those pillars, naming advantaged businesses & strategic initiatives and lower-carbon & digitally enabled businesses among the priorities. Management expects significant further progress in 2026 and believes existing businesses plus new opportunities will drive growth beyond the mid-term.

Market context, peers and policy signals

Investors have piled into UK-listed defence-related stocks over the past year, including Rolls-Royce, BAE Systems and Babcock, amid increased government spending commitments. BAE Systems posted a 10% rise in sales to £30. 67bn and underlying EPS up 12% to 75. 2p; for the year ahead BAE expects sales to increase 7%–9% and underlying EPS growth of 9%–11%. Meanwhile, Babcock — unclear in the provided context. Last year, Nato members committed to increasing spending on defence and related areas to 5% of their countries' GDP by 2035; this point should be treated as developing. Developing: UK prime minister Keir Starmer said Britain needed to "go faster" on defence spending earlier in February.

Market commentary noted the buyback’s outsized role in the stock move, with one chief market analyst saying the repurchase plan supplied the decisive element for the share surge and comparing the market’s reaction to other high-profile tech rebounds.

• Upgraded guidance and large buyback together shift the capital-return story.
• Operational strength: civil aerospace remains the largest revenue contributor.
• Payout mechanics: dividend payable 3 June 2026 and DRIP offered; tax credit adjusted reported metrics.
• Peer backdrop: defence-sector investor interest is a tailwind, with mixed clarity on policy commitments.

The real question now is whether the upgraded mid-term targets — underlying operating profit of £4. 9bn–£5. 2bn and free cash flow of £5. 0bn–£5. 3bn — and the planned £7bn–£9bn buybacks will be enough to sustain the current momentum in the rolls royce share price once the initial repurchase activity is executed.

Time layer: the company notes it has been at the forefront of innovation for more than 100 years and frames the current results as part of a multi-year transformation that has ramped over the past three years, with further progress expected in 2026.

What's easy to miss is how the deferred tax credit and the technical adjustments to EPS and return metrics change headline ratios even as cash flows strengthen; that nuance will matter when analysts revisit valuations and payout assumptions.

The company’s 2026 guidance also points to delivering underlying operating profit within the prior mid-term guidance range two years earlier than planned, and management has signalled confidence in long-term growth while allocating £2. 5bn of the buyback to this year within a broader £7bn–£9bn program for 2026–2028.