Rolls-Royce (LSE: RR)fell foul of the City expectations machine last week because, despite posting very good financial results for 2013 with profits growth of 23%, it has said that profits won't grow at all in 2014. The share price has been hammered.
We tipped Rolls-Royce as a long-term buy in MoneyWeek a few weeks ago. While the timing of this tip now looks unfortunate, we still believe that the long-term prospects for its shares remain good.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In 2014, profits in thissection are expected to grow strongly. Total company profitsare expected to start growing again in 2015. Taking a step backfrom the short-term outlook, Rolls-Royce looks to be in rudehealth.
Its order book of £71bn is nearly five times current salesand will help deliver long-term profit growth. It can still cutcosts and boost cash flow if need be. The company also has£1.9bn of net cash in the bank.
Verdict: buy
-
NS&I cuts interest rates on two easy-access savings accounts – are they still worth it?NS&I has announced more interest rate cuts, just weeks after launching less attractive rates on fixed-term British Savings Bonds
-
Hargreaves Lansdown shakes up fees in biggest change in 10 years – what does it mean for you?Hargreaves Lansdown is lowering its headline fee from 0.45% to 0.35% – but not everyone will be happy with the new fee structure, it’s been suggested.
