At around £9.70, is Rolls-Royce’s share price close to its ‘fair value’ yet?
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Rolls-Royce’s (LSE: RR) share price has gained 129% from its 25 July 12-month traded low of £4.23. From its 1 July 2020 opening price of 85p five years ago it is up 1041%.
However, there is no reason why a stock cannot still have enormous value remaining even after such a rise. Value and price are not the same thing at all in share investment.
Price is simply what the market is willing to pay for a share. Value is what a stock is fundamentally worth, based on the underlying business. This includes its core financial health, competitive position, and – crucially – its earnings growth prospects.
Consequently, identifying the difference between the two in a stock can make big profits…
