Rolls-Royce Holdings’ (LSE: RR.) shares have provided one of the FTSE 100’s top investing returns over the past five years. In fact, it’s hard to think of many stocks that have ever come close in a similar period. <\/p>\n
But after such stellar gains for shareholders, is it time to cash in and look for the next big winners? A few experts think cracks are beginning to show, and there are two main reasons\u2026 <\/p>\n
1. Has valuation run ahead of fundamentals? <\/p>\n
Cautious analysts point to Rolls-Royce’s market-cap, which has soared to \u00a3125bn. That puts it firmly in the Footsie’s top five. This time in 2021, it was under \u00a310bn. <\/p>\n
Earnings growth has been phenomenal, that’s for sure. Rolls has turned a struggle with losses into a cash-flow delight. But 2025 earnings per share (EPS) were a bit of a short-term one-off. And forecasters don’t see EPS matching the same level at least out to 2028. <\/p>\n
We’re looking at a forecast price-to-earnings (P\/E) ratio of 35. Sure, growth stocks can command much higher ratings than that. But they’re usually far smaller companies, only just touching on their potential. The long-term average P\/E for the FTSE 100, where Rolls-Royce lives, is closer to 15. <\/p>\n
Rolls’ valuation might not look much compared to the trillion-dollar US giants topping the AI race, some with P\/E ratios into the hundreds or more. But I think lifting hopes for Rolls-Royce shares into the same sphere as the likes of SpaceX or Tesla could end in tears. <\/p>\n
2. Expectations are exceptionally high <\/p>\n
Another cautious theme is the way Rolls-Royce has beaten analysts’ expectations time after time. Brokers set revenue and profit targets, Rolls’ management offers understated guidance, and the next set of earnings blows it all out of the water. And repeat\u2026 <\/p>\n
But those growth predictions surely have to slow, don’t they? And a company surely can’t keep beating forecasts for ever, can it? How will the market react if and when that doesn’t happen? <\/p>\n
The question is nagging at the back of more than a handful of analysts’ minds right now. <\/p>\n
Consensus: the bulls are still buying! <\/p>\n
These negative feelings however, are still a minority. Of 20 brokers offering recommendations on Rolls-Royce shares, 16 rate them a Buy. And not a single one has Rolls down as a Sell. <\/p>\n
The average price target of 1,718p though, is only around 15% ahead of today. And that doesn’t seem quite in line with such an overwhelming Buy consensus to me. <\/p>\n
Still, the City has been like this for some time. The average target stays only modestly ahead of the share price \u2014 but keeps edging up. <\/p>\n
So what should investors do? <\/p>\n
As I don’t own Rolls-Royce shares, I’m wary of speculating on what I might do \u2014 Buy and Sell decisions require a lot more thought for those who actually own a stock. <\/p>\n
But one thing I’ll always consider doing is trimming anything that’s risen to outweigh my other holdings by too much. And I think investors could be wise to consider doing the same. Well-balanced diversification helps me sleep better at night. <\/p>\n
What directions might diversification drive me? I have a number of top options in mind\u2026 <\/p>\n
Should you invest \u00a35,000 in Rolls-Royce Plc right now? <\/p>\n
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. <\/p>\n
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list? <\/p>\n
\u00a0See The Six Stocks <\/p>\n
Alan Oscroft does not hold any positions in the companies mentioned. <\/p>\n
The post Up 1,260% in 5 years, is it time to sell Rolls-Royce shares?<\/a> appeared first on The Twelfth Magpie<\/a>. <\/p>\n More reading <\/p>\n The Twelfth Magpie 2026 <\/p>\n","protected":false},"excerpt":{"rendered":"Rolls-Royce Holdings’ (LSE: RR.) shares have provided one of the FTSE 100’s top investing returns over the past…\n","protected":false},"author":2,"featured_media":104501,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[20731],"tags":[7920,1238,20767],"class_list":["post-108636","post","type-post","status-publish","format-standard","has-post-thumbnail","category-rolls-royce","tag-earnings-per-share","tag-rolls-royce","tag-rolls-royce-plc"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/117138035982955543","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/108636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=108636"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/108636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/104501"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=108636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=108636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=108636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}