There's a Charlie Munger quote I never forget: "The big money is not in the buying or selling, but in the waiting."
Anyone who bought Rolls-Royce two years ago and simply sat on their hands just watched the stock double in value. And on Thursday, the company let everyone know the party is far from over.
What happened, in plain English
Rolls-Royce — and we're talking about the aerospace engine manufacturer here, not the rich kid's car — dropped its earnings and sent a crystal-clear message to the market: we are transforming this thing and the numbers prove it.
Expected operating profit for 2026: between £4 billion and £4.2 billion. FactSet analysts were expecting something around £3.65 billion at the midpoint. In other words, the company blew past expectations like a Trent XWB on takeoff.
And free cash flow? Between £3.6 billion and £3.8 billion. Also above consensus.
But the real fist-on-the-table moment came after: a share buyback program of up to £9 billion (roughly $12 billion), with £2.5 billion being executed in 2026 alone. When a company this size decides to return money to shareholders at this scale, it's saying one thing: "Our balance sheet is a fortress and we know what we're worth."
The stock jumped 6.4% right at the open and marched toward an all-time high.
The transformation nobody on TikTok told you about
Remember when everybody wanted to talk about short squeezes and dog coins? Meanwhile, CEO Tufan Erginbilgic was quietly tearing everything apart inside Rolls-Royce.
The guy showed up in 2023 and said point-blank that the company was "a burning platform." Beautiful, right? The kind of brutal honesty that most corporate CEOs — those PowerPoint mannequins — would never have the guts to say out loud.
The result? In 2025, operating profit jumped over 40%, hitting £3.46 billion versus estimates of £3.32 billion. Revenue grew 12%, reaching £20.1 billion. And the company now says it will hit its mid-term targets two years ahead of schedule.
Two. Years. Early.
That's skin in the game. That's execution.
Where's the money coming from?
Three engines (no pun intended... okay, pun intended):
1. Power Systems — The power generation business grew 19% organically. Why? Because the world is building data centers like there's no tomorrow, and guess who supplies the power generation systems for these artificial intelligence factories? Exactly.
2. Civil Aerospace — The engines that go on Boeing and Airbus planes grew 15%. With demand for air travel still recovering post-pandemic and a tight supply chain, anyone making engines is sitting on gold.
3. Defense — Growth of 8%. With the world in its current geopolitical state — Russia, China, the Middle East — military budgets are only going one direction: up.
Analyst Chloe Lemarie at Jefferies called the release "high quality." Translating from analyst-speak: "there's no smoke and mirrors here, the numbers are real."
And the targets for 2028?
The company updated its mid-term guidance: operating profit between £4.9 billion and £5.2 billion, operating margin of 18% to 20%, and free cash flow of up to £5.3 billion.
For context: three years ago this company was seen as practically a lost cause post-COVID. Today it's printing money like the Royal Mint.
The lesson the market keeps forgetting
Buffett has said it till he's blue in the face: buy wonderful companies at a fair price and let time do the work. Rolls-Royce is not a sexy company. It doesn't have an app, doesn't have an influencer, doesn't have a token. It makes airplane engines and power turbines. And it's crushing the market.
While retail investors keep chasing the next Nvidia or the next miracle short squeeze, the folks who bought an industrial company with an honest CEO and a serious restructuring plan are grinning at their brokerage statements.
The question is simple: do you have the patience and the stomach to buy the right company at the right time and do nothing for two years? Or would you rather keep churning your portfolio chasing the thrill?
Because the market doesn't reward emotion. It rewards discipline.
