The Rolls-Royce (LSE: RR) share price has finally lost its sparkle. It fell 4% last week and is up less than 7% over six months.
That’s a wake-up call for investors dazzled by how well the shares have done over the last five years, climbing an astonishing 1,328%.
That’s a thrilling return, but it’s history now. Investors buying today can’t expect anything like that kind of return. There’s another issue. Despite the recent dip, Rolls-Royce shares remain expensive, trading on a price-to-earnings ratio of 46. That’s down from 66 at the start of the year, but it’s still a toppy valuation. CEO Tufan Erginbilgic has to keep profits, revenues and free cash flowing to impress investors. Can he do it?
