There is only one FTSE 100 stock growth investors are talking about today. That’s right Rolls-Royce (LSE: RR), of course, is up another 5% this morning after an excellent set of full-year results. Pre-tax profit for 2025 jumped 46% to £3.35bn, while free cash flow hit £3.3bn. CEO Tufan Erginbilgiç also delighted investors with a share of the £2.5bn return.
I’m happy too, as an FTSE 100 aircraft engine manufacturer is proud of my Self-Invested Pension (SIPP) position. But since there is a big stake, I don’t plan to buy more. I don’t want to be too high on one stock. So I’m looking elsewhere to grow. And today there’s a blue-chip stock hitting Roll that I’ve never looked at. Its name?
Image source: Getty Images
Howden shares lead the FTSE 100 today
Howden Joinery Group (LSE: HWDN). Don’t laugh. A commercial kitchen supplier does not have the power of a Rolls-Royce. But its shares led the FTSE 100 this morning, rising nearly 8% in early trading. Sadly, its long-term record is not up to Rolls-Royce’s standards.
Even after today’s jump, Howden’s share price is up just 4% over the past year and an average of 18% over five years. Investors have more dividend yield, but with a trailing yield of 1.78%, the total return was unchanged. In contrast, Rolls-Royce is up 113% in one year and 1,069% over five.
Today, the £5bn company reported that group profits rose 4.1% to £2.42bn, with UK sales up 3.8% despite a tough market. A tighter cost of living and a slower housing market continue to weigh on kitchen demand. We do better overseas. International revenue increased by 13.5% as Howden expanded in France and the Republic of Ireland.
Margins improved by 110 points to 62.7%, as revenue growth and manufacturing efficiencies offset inflation, delivering £41m of productivity savings. Pre-tax profit rose 5.1% to £344.9m. Howden launched a new £100m share buyback and raised its full-year dividend to 21.9p per share, up 3.3% from 21.2p.
Investors are happy today, but the long-term picture is less certain. Howden said the UK kitchen market is likely to be flat year-on-year, although this is following a year-on-year decline. It remains on track to meet 2026 forecasts.
Rolls-Royce shares cannot be ignored
With a price-to-earnings ratio of 18.5, it’s clearly not cheap. There’s a reason I never switched to Howden. It may be worth considering for long-term, patient investors, but it lacks excitement. Especially when compared to Rolls-Royce, which has more in its cupboard. It is targeting £4bn-£4.2bn of underlying operating profit by 2026 and £3.6bn-£3.8bn of free cash flow.
Although profit-takers may emerge in the coming days, these are very strong results and the long-term outlook remains compelling. Erginbilgiç also raised the bar, targeting free cash flow of £5bn-£5.3bn by 2028, and a return on capital of 23%-26%. It’s starting to look important for UK investors with a long-term view but with a P/E hovering at a staggering 65, any bad news will be punished.
Well done Rolls-Royce, well done Howden too. But for my next big FTSE 100 play, I’ll look elsewhere. I think there are better opportunities now.
