Rolls-Royce shares surged on September 19, 2024, after the Czech Republic’s ČEZ Group named the company as its preferred supplier for Small Modular Reactor (SMR) technology. The stock jumped 5.75% to 525 pence, marking a 52-week high and capping a remarkable 650% gain over the past 23 months.
Key Takeaways
- Czech utility ČEZ Group selects Rolls-Royce for SMR supply
- Shares up 5.75% to 525 pence, 52-week high and 650% gain in 23 months
- SMRs deliver 470 MW, powering ~1 million homes for 60+ years
- Global SMR market projected to reach $72.4 billion by 2033 (CAGR 30%)
Smr Contract Win
Rolls-Royce’s SMR unit was chosen as the preferred supplier by ČEZ Group for mini-nuclear reactors in the Czech Republic. This flagship project:
- Signals EU backing for low-carbon nuclear solutions
- Positions Rolls-Royce at the forefront of compact reactor technology
- Lays groundwork for future SMR exports across Europe and beyond
Table: SMR Technical Metrics
| Metric | Detail |
|---|---|
| Output | 470 MW |
| Lifespan | 60+ years |
| Footprint | 1/10 Conventional Plant |
| Estimated Cost | $1–3 billion |
Impressive Share Performance
Rolls-Royce’s share price has rebounded strongly since late 2020:
- Climbed to 525 pence on September 19, 2024 (new 52-week high)
- Up ~650% in 23 months
- Trading well above 50-, 100- and 200-day moving averages
This momentum reflects renewed investor confidence amid strategic refocusing and robust defense and nuclear order pipelines.
Strategic Portfolio Shift
To hone its core strengths, Rolls-Royce has:
- Sold its naval propulsion unit to concentrate on combat, submarine, and nuclear sectors
- Streamlined operations, targeting higher margins in aerospace and defense
- Reinvested proceeds into R&D for cutting-edge energy technologies
Investor Considerations
While the SMR deal underscores growth potential, investors should weigh:
• Valuation: Forward P/E of ~29x suggests expectations are priced in
• Capital Intensity: Each SMR demands $1–3 billion upfront
• Regulatory & Perception Risks: Nuclear roll-out faces licensing and public acceptance hurdles
Diversification across geographies and end markets remains crucial for risk mitigation.
Looking Ahead
The first Czech SMR unit is unlikely to be operational until the mid-2030s, but early engagement positions Rolls-Royce for long-term contracts in Europe and beyond. Combined with aerospace recovery and defense spending trends, the SMR pipeline could become a significant revenue stream by the 2030s.
