Here is why the price of Rolls-Royce shares has jumped 88% in a year, breaking records!

Some say the Ftse 100 It lacks good growth stock opportunities, but a look at the Rolls-Royce (LSE: RR.) The shares pricing table tells a different story. Returns for investors in the aerospace and defense pioneer in recent years have been exceptional.

Under the leadership of Tufan Erginbilgiç, the reaction motion manufacturer has roared in action with a remarkable change of his pandemic problems. As the company updates its perspective in the middle of the period, Rolls-Royce shares continue to exceed new maximums in 2025. Consequently, I am a very happy shareholder.

Let's explore the reasons that support stellar performance and where the price of the shares could go below.

Exceed market expectations

The results of Rolls-Royce FY23 were exceptional, but their profits for the fiscal year24 could be even better. The operational profits fired 55% to reach £ 2.5 billion, and the free cash flow almost doubled to £ 2.4 billion. The balance has also recovered completely. The company now enjoys a net cash position of £ 0.5 billion compared to a net debt load of £ 2 billion the previous year.

In addition, the shareholders received a surprise plan to repurchase shares of £ 1 billion by 2025 and the resumption of dividend payments for the first time since Covid-19 almost destroyed the business. Looking at these numbers together, it is not surprising that the price of Rolls-Rayce shares is booming.

Having achieved some of its 2027 objectives two years in advance, the Board has also raised its ambitions in a variety of key metrics.

Can growth continue?

An increase in the price of shares has pushed the highest Rolls-Royce assessment. Blue-Chip shares are currently quoted to a price ratio to profits (P/E) of 26.5 and a direct P/E 36.8. Those are not cheap multiples, which raises questions about the future growth trajectory.

However, the company's term guide suggests that these concerns could be unfounded. The large motor flight hours are expected to reach 115% of the 2019 levels this year, driven by a robust international travel demand. That is crucial considering that more than 50% of the company's income comes from the Civil Aerospace Division.

The perspective of the defense arm is equally optimistic. Prime Minister Sir Keir Starmer is committed to promoting the defense expense of the United Kingdom to 2.5% of GDP by 2027. As one of the government's favorite military contractors, this is a good omen for Rolls-Rayce actions.

With luck, we will see more good news after the biggest victory of the company's modification contract earlier this year. The eight -year agreement is valued at 9 billion. Rolls-Royce will provide design, manufacturing and support services for nuclear reactors to feed the underwater fleet of Great Britain.

Technological advances for the energy systems unit provide greater stimulus. Rolls-Royce has been established as market leader in small modular nuclear reactors. Potential growth opportunities for applications in space missions and energy hungry data centers add another chain to the company's arch.

These reasons for optimism should be balanced with the interruption of the supply chain for the Trent 1000 engine parts, which could prevent the business from reaching its objectives. In addition, recent technical failures for the company's engines raise safety and risks of reputation.

What I am doing

The additional growth in the price of Rolls-Royce shares is not guaranteed, but I still see some reasons to sell my shares. I have enjoyed some spectacular profits of my investment so far, and I hope there is more to come in the future. For investors who are not owning shares, I think it deserves serious consideration.