The aeronautical engineer Rolls-Royce (LSE: RR) is not any stranger to coping with turbulence. Its personal monetary efficiency over the previous few years has concerned staggering shifts in altitude. Rolls-Royce shares are actually a little bit over 11 instances the value they have been when the corporate raised money in late 2020 by flooding the market with new shares at a low value.

Apparently, although, after the corporate revealed its full-year outcomes final week, investor enthusiasm has remained robust. Some Metropolis analysts have elevated their goal value for Rolls-Royce shares.

So, might I nonetheless attempt to trip the corporate’s long-term industrial prospects by investing now?

Heaps to love

I feel there are fairly a number of issues to love in regards to the enterprise.

Demand for plane engines is excessive and more likely to stay that manner for years as air journey has come storming again after it largely petered out in 2020.

Engine makers can become profitable promoting an engine. However with a working lifetime of a long time and safety-critical performance, servicing the engines usually seems to be greater enterprise over the long run than the preliminary sale.

Limitations to entry are excessive, limiting competitors and serving to preserve companies’ pricing energy. Rolls has a big buyer base and sizeable gross sales pipeline. Its order guide for giant engines stood at 1,632 on the finish of final 12 months.               

Buying and selling money stream soared final 12 months within the firm’s key civil aerospace division. However it additionally virtually tripled within the energy techniques enterprise and grew in defence, an space set to expertise greater demand for the foreseeable future.

What are Rolls-Royce shares price?

Clearly, the corporate is performing nicely and will do even higher over the following few years.

It has set out formidable targets for the medium time period and described final week’s outcomes as “a big step in the direction of our mid-term targets”.

That helps clarify why some traders see Rolls-Royce shares as attractively priced even after they soared because the darkish days of 2020.

Final 12 months’s statutory earnings per share of virtually 29p imply that the enterprise now trades on a price-to-earnings (P/E) ratio of 13. For a well-performing FTSE 100 firm that already appears cheap for my part.

But when the enterprise can ship on its formidable targets, earnings might develop. On that foundation, the possible P/E ratio could also be in single digits even on the present share value. That valuation seems low-cost to me.

I’m not shopping for

However such a valuation depends on the corporate staying the course.

Progress up to now has been good however there may be a lot work to be finished to bridge the hole between the corporate’s historic efficiency and its difficult targets on a sustainable foundation.

That could be impeded by dangers exterior Rolls’s management. The 2020 rights challenge adopted a collapse in demand because of occasions past the agency’s management. That’s an ongoing danger in aviation and will once more badly damage profitability in some unspecified time in the future in future.

Rolls-Royce shares presently look priced for efficiency according to the corporate’s targets.

If that doesn’t materialise, for any motive, the value affords no margin of security for me as an investor. So I’ve no plans to speculate.