Over the past few years, Rolls-Royce (LSE:RR) has been a phenomenal stock market performer.  Over five years, the share price has moved up by 953%.

Lately though, things have been looking less rosy. When the market closed Wednesday (29 April), the Rolls-Royce share price was around 19% lower than it had been in the first week of last month.

One reason for the fall is over investor concerns about what the Middle East conflict could mean for jet fuel prices and demand for flying. That matters to Rolls-Royce because of its large civil aviation division.

As we saw in the pandemic, reduced flying hours can mean a drop in demand for engine servicing revenues. When passenger demand falls or the industry economics change due to markedly higher input costs, airlines are also prone to cut back on spending plans for new planes, pushing down engine sales.

With its Annual General Meeting scheduled for today (30 April), Rolls has issued a trading statement to bring shareholders up to date on how the company is faring.

A confident company in a challenging market environment

The statement clearly aims to send out a reassuringly positive message. Rolls talks of “a strong start to the year”, and emphasizes that the company’s structure and culture is “better equipped to respond to changes in the external environment”.

Specifically, although Rolls recognises that the Middle Eastern conflict has created uncertainty for its industry, it says it expects “to fully mitigate the current financial impact of the disruption to our business“.

Nobody has a crystal ball, of course, so when Rolls-Royce explicitly refers to the “current” financial impact, it is giving itself leeway to change its outlook should events change for the worse. That seems reasonable.

Overall though, the message is that the company continues to expect to hit its current full-year targets for 2026.

In recent years, being a consistent and reliable deliverer has helped the Rolls-Royce share price soar. I expect that today’s statement could help support the share price in coming days and weeks as investors take comfort from its reassuring tone.

In early trading today it is up around 1%.

Not out of the woods — and not cheap, either

Credit to Rolls-Royce for managing a fast-evolving situation in a way it expects will let it still deliver on its forecasts for the year. Reassuringly, it said in the statement that “demand for new widebody aircraft remains firm”.

However, the reality is that risks such as lower civil aviation demand lie outside the company’s control. If the situation gets worse from here – for example because higher air fares lead to passengers deciding to fly less – the current geopolitical crisis and its economic impacts could yet come to hurt Rolls-Royce worse than it currently expects.

That might matter less if the Rolls-Royce share price offered me more margin of safety. But it closed yesterday at 37 times earnings.

I do not think that looks cheap. My concern remains that, if the crisis drags on, it could end up hurting Rolls’ earnings more than is currently foreseen.

Today’s news may help boost the share price. But I do not think it has taken away the short-to-medium-term risks for the company. I still have no plans to buy.