Rolls-Royce vs BAE Systems, side by side
Two of Britain's proudest engineering names, running on different fuel. Rolls-Royce makes jet engines for airliners and is largely paid by the flying hour, so its fortunes track global air travel - plus a growing defence and power-systems arm. BAE Systems is a pure defence company: warships, jets, submarines and electronics, sold on multi-year government contracts.
On our factor screen it looks strongest on momentum and quality, and weakest on value.
On our factor screen it looks strongest on momentum and growth, and weakest on value.
The numbers, side by side
| Measure |  Rolls-Royce |  BAE Systems |
|---|---|---|
| Price | £14.68 | £20.94 |
| Market cap: The company's total value on the stock market - share price times the number of shares. Big = 'large-cap', small = 'small-cap'. | £121.30B | £61.37B |
| P/E: Price-to-earnings: the share price divided by yearly profit per share. Lower can mean cheaper; higher often means investors expect fast growth. | 40.8 | 29.9 |
| Div yield: Dividend yield: the yearly dividend as a percentage of the share price - roughly the income you'd earn just from dividends. | 0.8% | 1.8% |
| Revenue growth | 20.6% | 7.7% |
| 1Y: How much the share price has moved over the past year. | +37% | +15% |
More measures
| Forward P/E: Price-to-earnings: the share price divided by yearly profit per share. Lower can mean cheaper; higher often means investors expect fast growth. | 32.9 | 22.0 |
|---|---|---|
| Net margin | 13.1% | 7.2% |
| ROE | 114.5% | 18.6% |
| Beta: How bumpy the share price is versus the whole market. Above 1 swings more than the market; below 1 is calmer. It's about the ride, not whether it goes up or down. | 1.20 | -0.07 |
The bolder figure is simply the larger of the two - higher is not automatically good (a higher P/E means more expectation in the price; a higher beta means bigger swings).
How they differ
Rolls-Royce is roughly 2.0x the size of BAE Systems by market value. On our factor screen Rolls-Royce currently screens higher on momentum and quality, while BAE Systems screens higher on value. Rolls-Royce trades on the higher P/E (40.8 vs 29.9), so more expectation is already built into its price; and BAE Systems currently yields more (1.8% vs 0.8%). Over the past year the share prices moved +37% (Rolls-Royce) vs +15% (BAE Systems).
Descriptive only - how the two compare on today's data, never a verdict on either.
Rolls-Royce, in one line
Rolls-Royce is a British engineering giant that powers the world's long-haul flights and provides complex energy and defence systems.
Read the full Rolls-Royce explainer →BAE Systems, in one line
BAE Systems is a British giant that designs and builds advanced defence technology, from fighter jets and submarines to cyber security systems.
Read the full BAE Systems explainer →What to weigh
If dividend income matters to you, the yields differ (0.8% Rolls-Royce vs 1.8% BAE Systems); and if sharp swings bother you, the betas differ (1.20 vs -0.07). These are facts to understand, not a verdict - read each full explainer before deciding anything.
Common questions
Why does air travel matter so much to Rolls-Royce?
Much of its engine income arrives through long-term service deals priced per flying hour. When planes fly more, revenue climbs; when aviation stalls - as in 2020 - it falls away sharply.
What makes defence revenue different?
Governments place orders on contracts that run for years or decades, which gives BAE an order backlog and unusual visibility. The flip side: it depends on defence budgets and political decisions rather than consumers.