Back in September 2023, Rolls-Royce (LSE: RR.) shares were sitting pretty at 215p a pop. That was a remarkable price considering that the very same stock changed hands for just 75p or so 12 months earlier.

At the time, I just couldn’t bring myself to buy, believing that any company would struggle to replicate a gain of around 186% in the following year.

In one way, I’ve been completely on the money. Rolls-Royce has failed to match this form. But it’s still done seriously well.

Astonishing gains

Using today’s share price, I could have made an incredible gain of 119% had I bought in September 2023. So, an investment of £10,000 would have grown to £21,900. For comparison, the FTSE 100 is up only 11% over the same period. And that’s actually a pretty great return considering just how lacklustre the index has been in recent times.

Is there even more to come? At the risk of sounding like a stuck record, I’m not so sure.

Worrying development

The engine failure on a Cathay Pacific flight earlier this week seems to have prompted at least some investors to bank a profit. We’re seeing a bit more selling pressure today (6 September). This follows the announcement that the European Union Aviation Safety Agency has asked for visual checks to be made on some of the company’s engines.

The question being asked now is whether this is a one-off issue or something more alarming. If additional faults are discovered, we can expect more flights to be cancelled by airlines. This would clearly be a huge issue for Rolls-Royce. Put simply, it makes most of its cash when planes are in the air.

Is the stock priced for perfection?

Now, reputational and earnings hits would be bearable for me if it was clear that any problems were being swiftly remedied and the company’s valuation wasn’t already frothy. However, Roll-Royce shares currently change hands at a forecast price-to-earnings (P/E) ratio of 28, according to my data provider. This implies investors are excited about the firm’s outlook. But it also suggests they will be merciless if the company even slightly disappoints.

I might be comparing apples with oranges here but this feels similar to what’s happening across the pond with Nvidia. While the chipmaker’s long-term outlook still looks very positive, it seems that near-term expectations have finally overtaken reality. And its shares are down 12% in just the last five trading days.

Another thing I’m contemplating is whether this week’s news could mean that Rolls-Royce’s plan to restart its dividend — announced in August — might be postponed. Should this be the case and the stock’s purple patch of form come to a screeching halt as a result, I won’t be compensated for staying patient and waiting for a recovery.

I’m still wary

Through effective cost-cutting and an admirable no-nonsense approach, I think CEO Tufan Erginbilgiç has done a remarkable job of turning this company around. I certainly wish my crystal ball had been working and pushed me to invest one year ago. At the height of the pandemic would have been even better. Congratulations to anyone who did. No sour grapes here.

But I continue to be wary of Rolls-Royce shares, albeit for different reasons than before.