£500 invested in Rolls-Royce shares 5 weeks ago is now worth…

It’s no secret that Rolls-Royce (LSE:RR.) shares have dominated the FTSE 100, rocketing up more than 1,200% in the last three years.

In 2026, this upward trajectory has continued. And even in the last five weeks, Rolls-Royce has delivered yet another 10% gain, transforming a simple £500 investment into £550. But with a £115bn market-cap and a forward price-to-earnings ratio of 39.4, can this FTSE stock really climb higher?

Here’s what the experts are saying.

Exceptional quality at a high price

There are several factors driving up Rolls-Royce shares in the last few weeks. Most notably, the group’s impressive full-year results for 2025, alongside the announcement that management’s executing a new £2.5bn share buyback scheme.

Underlying operating profits last year surged ahead by another 40.5% from £2,464m to £3,462m in 2025, thanks to a combination of increased revenue and wider profit margins.

But it’s the free cash flow figure that most analysts are focused on. After all, the excess cash generated from operations is what the company needs to shore up its leveraged balance sheet. And just like earnings, free cash flow also charged ahead from £2,425m to £3,270m.

Can this surge in sales, profits, and cash flow continue in 2026? Looking at the guidance, the answer appears to be yes.

Rolls-Royce now expected to deliver £4bn–£4.2bn of adjusted operating profits, with £3.6bn–£3.8bn in free cash flow. That means the company’s on track to hit its previous 2028 targets two years early – an extraordinary acceleration of the firm’s turnaround timeline.

With that in mind, it’s no surprise to see Rolls-Royce shares continue to outpace the market and command an expensive premium valuation.

So is this a no-brainer buy for UK growth investors?

What to watch

Even when stocks trade at premium valuations, investors can still go on to earn impressive gains in the long run. But it nonetheless increases the risk of buying shares. And looking under the bonnet, there are some growing headwinds that could cause the firm’s current impressive growth to gradually slow.

Over the last few years, its civil aerospace segment has enjoyed strong post-pandemic recovery tailwinds of long-haul flying hours, which have, in turn, driven up demand for the group’s high-margin aftermarket services.

However, this ‘catch-up’ phase of the recovery is now complete. And while global flying hours are still expected to steadily increase moving forward, the pace has already slowed considerably.

Something else to watch carefully is the risk of supply chain disruption. Management’s already warned that 2026 could see £150m–£200m of additional cash costs as a result. Yet if component shortages worsen as a result of growing geopolitical and trade tensions, this impact may prove worse than expected, resulting in Rolls-Royce missing its 2026 targets.

So where does that leave investors? Betting against Rolls-Royce shares has proven to be a costly mistake in the last few years. But as impressive as the business has become, the valuation leaves little room for error. And while leadership’s proven itself exceptionally skilled at operational execution, external disruptions could nonetheless throw a spanner into the works.

That’s why I think investors may want to consider looking elsewhere until a more attractive entry point emerges. Luckily, they’re spoilt for choice.

The post £500 invested in Rolls-Royce shares 5 weeks ago is now worth… appeared first on The Motley Fool UK.

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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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