I haven’t posted anything on this issue.
One logic that was less discussed:
Back in 2014, NATO leaders agreed to increase spending towards 2% of their GDP on defense within a decade.
But this hasn’t been achieved.
Here is 2023 number
And previously, for example
US may feel it’s less willing to over-spend for the long run.
And it’s mostly a question for European countries. How much they should spend on defense?
Europe’s overall economy and finance situation doesn’t seem very strong, compared to the US.
Maybe the GFC created too large a problem that took years to truly recover.
Ukraine may be the catalyst that really makes EU leaders to rethink about defense.
Rolls-Royce stock has been more than tripled in 2023! And continue to rise in 2024.
Of course, the end of covid helped a lot.
But Rolls-Royce is indeed a very important defense company for EU.
Defense segment op. profit is 35% of the total, up 30% in 2023, with 14% op. margin.
2024 guidance: underlying operating profit between £1.7bn and £2.0b!
That’s 25% growth if hit the upper end.
2023 NOPAT £1.4bn -> 2024 of £1.7bn? or $2.1bn?
Then it’s at above ~20x NOPAT, not cheap but can still go up.
