We’re almost halfway through 2026 and the Rolls-Royce (LSE: RR.) share price has barely moved. In fact, a £5,000 investment into Rolls-Royce shares on 1 January would be worth only £5,128 now (dividends included).

That’s just £128 profit in almost five months. You’d maybe have done better collecting change on the street corner.

That’s right, the once mighty Rolls has only delivered a total return of 2.54% so far this year — and that’s after an impressive 58.3% dividend boost!

So is the dream over — or is this just a minor pause while the gap between price and earnings narrows?

Mitigating factors

The question many investors are probably asking now is: does Rolls-Royce have more gas in the tank, or could this be the start of a drawn-out correction?

To get an accurate answer to that question, we need to look at how its earnings and valuation weigh against broader macro factors.

Despite what appears to be strong operational performance, I think the share price is struggling because a lot of the good news is already priced in. In other words, the business is delivering strong earnings, but the market has become increasingly skeptical about further growth.

The biggest reason is valuation. After years of uninterrupted growth, the shares trade on a high earnings multiple. That makes it harder for the stock to keep compounding at the same pace as before – unless the company keeps outperforming by an increasingly wider margin.

And there’s a few real execution risks that can’t be overlooked. For example, aerospace supply chains are still constrained, with an expected cash impact of £150m-£200m in 2026. Parts availability is improving, but until the Middle East conflict is resolved, there’s no guarantee that’ll hold.

Rolls has admitted how uncertain the future is, highlighting its dependency on long-haul flying and engine service hours.

The key question now is, can strong earnings alone keep the share price afloat?

Strong earnings, stronger expectations

There’s no question that Rolls’ 2025 numbers were excellent:

• Underlying operating profit rose to £3.46bn.
• Free cash flow hit £3.27bn.
• Net cash reached £1.9bn.

Guidance for 2026 was also upgraded to £4bn-£4.2bn of underlying operating profit and £3.6bn-£3.8bn of free cash flow. So it’s clearly firing on all cylinders and is optimistic about the future.

The problem is that the market has been expecting this kind of progress for a while, so incremental upgrades are not producing the same share-price pop they did earlier in the turnaround.

What does this all mean for investors?

For shareholders with a 10-20-year horizon, the investment case hasn’t changed. There’s nothing to suggest the company won’t keep delivering strong performance for decades to come.

But price-wise? I’ve always been an advocate for locking in some profits when valuations look lofty, but in Rolls’ case, it may not be worth it.

The shares could suffer some minor losses in the short-term but it’s unlikely to be a move worth capitalising on.

Long story, short: Rolls is still one of the UK’s most appealing growth stocks to consider right now. But investors may need to be a bit patient before enjoying the next leg up.

Mark Hartley does not hold any positions in the companies mentioned.