It was a great year for the shareholders in the airline Rolls Royce (LSE: RR). This month, Rolls-Royce shares have penetrated the price of the price of 10 pounds for the first time in date (although it has decreased a little now).

This reflects the amazing story of the transformation in Rolls -Royce FTSE 100 The company’s share price rises 969 % In only five years.

This type of performance is exceptional – exceptionally attractive to many investors, including me. Therefore, should I put some money on Rolls-Royce’s shares now, or have it been too late?

It grows in its current evaluation

Before looking at whether the share may move higher from here, it is worth stopping to ask whether the company deserves to its current price.

The current price ratio (P/E) is 33. This looks high for me, especially for a long history of mixed financial performance that works in a mature industry.

Can it be justified, though?

Rolls has set ambitious financial goals that its potential evaluation may be cheaper than the current P/E ratio.

For example, by 2028, you expect to reach 4.2 billion pounds-4.5 billion pounds of annual free cash flow. It will be 75 % -88 % higher than last year. The profits and free cash flow differ, but this goal helps to show the reason for the investors remain enthusiastic about the capabilities in the company.

The goal is one thing – but hitting it is something else. Here, though, the current administration has been well performed so far. Although business works in mature industries, they reap bonuses of high demand for customers in all areas of their three businesses: civil aviation, defense and power generation.

If the company continues to perform strongly, the shares may grow to become its current evaluation, and I think it is partially dependent on expectations about the highest profits. This can justify a higher share price. After it reached 10 pounds, there is a reliable case to participate to move to the top in the next few years.

The risk profile makes me uncomfortable

But although I can see a way to a higher price-and I think it’s reliable-at the present time, I have no plans to buy any Rolls-Royce shares for my wallet.

The reason is simple: I do not think that the current share price reflects the risk profile in a way that makes me comfortable.

Take the image of the external demand. I expect the defense application to remain high in the coming years. Energy generation may also be, although this sometimes has become part of governments spending, and large capital projects can be postponed if the economy is weak.

The demand for civil aviation, as history has shown repeatedly, recently, during the epidemic, can descend overnight in a way that engine makers cannot affect, not to mention control. I brought rolls to her knees five years ago – and still pose a decisive danger in my opinion.

Meanwhile, I see some other risks. Doubles almost wonderful free cash flows – but where will the money come from? Cost savings can only go after.

If the company raises the prices too much, customers may shop for more. There are not many engines – but there are some, and large airlines motives know how to drive a solid deal.