With a jaw-dropping P/E of 50 is it madness to hold on to your Rolls-Royce shares?

Rolls-Royce shares have surged from a low of 39p in October 2020 to 1,443p today, helped by a turnaround since CEO Tufan Erginbilgic took over in January 2023. The FTSE 100 engineering group nearly collapsed during the pandemic as aircraft servicing revenues fell. In the first half of 2026, underlying operating profit rose 46% to £2.5bn and free cash flow increased 24% to £2bn. Full-year guidance was raised to £4.7bn–£4.9bn for profit and £3.8bn–£4bn for cash flow. However, the valuation remains stretched, with a P/E of 50 versus about 16 for the FTSE 100. Forward estimates point to P/E around 35 in 2026 and 31 in 2027. Risks span civil aerospace, defence spending, and power systems demand, plus long-term modular reactor potential.