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If Tufan Erginbilgiç could do for the England football team what he has done for Rolls-Royce (LSE: RR), we would win the euros at a canter.
The turnaround since he was named CEO on January 1, 2023 (less than 18 months ago) is nothing short of astonishing. Rolls-Royce shares closed at the end of December 2022 at 93.2 pence. Today you would have to pay 475 pence to buy them. That's a staggering 415% return. It would have turned a £10,000 investment into £51,462.
It is true that it is not as good as the chip manufacturer. NVIDIA. His shares have soared 795% over the same period, turning £10,000 into £89,500. It's still pretty good though. The big question is: can Erginbilgiç move forward?
FTSE 100 recovery star
Everything I've read about the man suggests he has the courage and will to do it. When he took over, Rolls-Royce had lost 75% of its share value, after being hit by one problem after another. Today it is no longer a burning platform, but booming.
However, Rolls-Royce's share price and Erginbilgiç's reputation are not the only factors that are on the rise today. So are investor expectations and the company's valuation. Shares now trade at 35.3 times trailing earnings. This means tripling the FTSE 100 average of 12.7 times.
However, the share price continues to rise, another 11.15% in the last month. In one year, it has shot up 209.24%. The pace of ascent is slowing, but the runner Citi just raised its price target to 555p. That's 17% more than today.
account “positive feeling” will continue to drive revaluation, which is one of the things that worries me. The feeling is positively dizzying. The slightest loss of results could jolt you back to reality.
Yes, Citi says demand for wide-body jet engines and hopes of restoring a dividend justify its new price target. No doubt we'll all be watching like hawks when Rolls-Royce reports its first-half results on August 1.
I can't buy it today
The outlook looks promising, with 2023 sales of £16.49 billion predicted to reach £16.82 billion in 2024 and £18.2 billion in 2025.
The specter of debt loomed over Rolls-Royce for years. However, it fell from £3.3bn in 2022 to £2bn in 2023, and is forecast to collapse to just £270m in 2024. In 2025, the group will have a net cash position of £1.9bn. .
Investors have fully bought Erginbilgiç. However, as its initial shock doctrine wears off, growing the business could become more difficult. Being a boss becomes increasingly difficult. Ask Gareth Southgate.
We'll know more when next month's results are known. I don't see a major bounce: how much good news can a company offer?
We are also reaching the Rolls-Royce peak and the Erginbilgiç peak. I'm looking elsewhere for the next big turnaround of the FTSE 100. Sadly, it probably won't be as big as this one.
