It has been a exceptional few years for shareholders in Rolls-Royce (LSE: RR). In the course of the depths of the pandemic, the aeronautical engineer was on its knees. Rolls-Royce shares bought for pennies apiece as lately as 2022.

Now although, the Rolls-Royce share price is over £7. It’s up 585% over the previous 5 years. With that form of momentum, might the shares probably go any larger – and ought I to purchase some for my portfolio?

Some potential boosters for enterprise development

I do see some floor for optimism with regards to the potential ongoing development of Rolls-Royce’s enterprise, each on the prime line (income) and backside line (income).

Demand for plane engine gross sales and servicing stays excessive. The identical is true for energy programs and the defence enterprise. Final 12 months noticed underlying income development in these areas of 24%, 11% and 13% respectively.

Whereas the civil aviation quantity stands out – particularly as it’s the largest enterprise – all of these development figures are robust. With ongoing excessive demand, I reckon revenues might develop this 12 months too.

In the meantime, the corporate’s internet earnings grew final 12 months, however not by as dramatic an quantity as some traders could have hoped.

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Which will recommend that a few of the straightforward wins for the corporate have already been achieved with regards to reducing prices. Nonetheless, this 12 months the corporate has upgraded its medium-term targets, which have been already formidable by the corporate’s latest historic normal. It’s now aiming for £3.6bn–£3.9bn of underlying working revenue by 2028 and an underlying working margin of 15-17%.

I’m nervous in regards to the share price

However that’s removed from assured. Present commerce disputes threaten demand for brand new engine gross sales. Sharp swings in some key currencies might additionally have an effect (unfavourable or optimistic) when they’re reported again into Rolls’ reporting foreign money of sterling.

On prime of that there are ongoing dangers that concern me in regards to the aviation business as they are often signficiant however fall largely exterior the management both of airways or engine makers. One other pandemic, giant terrorist occasion or warfare might immediately ship passenger demand right into a headspin. That might seemingly be dangerous for revenues and income

With the best margin of security within the share price, that may not hassle me. All shares carry dangers, in spite of everything: the good investor merely goals to price them correctly.

However a rising share price has been pushing Rolls-Royce’s price-to-earnings ratio upwards. It now stands at 24.

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That’s too excessive for my consolation with regards to having a margin of security.

Each investor is totally different, in fact. I can properly think about that if investor enthusiasm stays excessive or the corporate broadcasts additional excellent news, the share price could transfer up from right here.

From a long-term investing perspective although, the present share price shouldn’t be engaging to me and I cannot be investing.