Looking across the FTSE 100, the Rolls-Royce (LSE:RR.) share price has been putting many of its peers to shame. The engineering giant has seen its valuation skyrocket over the last 12 months, with the group’s market cap expanding by roughly 180%!

That makes it the top-performing company in the UK’s flagship index, firmly ahead of NatWest Group, which is up 105%. But after enjoying an enormous surge, the question on investor’s minds is whether it’s too late to hop aboard the gravy train? Let’s take a look.

A stellar comeback story

The travel restrictions during the pandemic were a massive blow to Rolls-Royce’s primary source of revenue – aeroplane engine maintenance. And at one point, the situation got so bad that it seemed like Rolls-Royce was heading straight for bankruptcy.

However, while Covid-19 was undeniably catastrophic, problems at Rolls-Royce had been brewing for years earlier. Mismanagement of capital allocation and excessive borrowing put the firm’s balance sheet in a less-than-ideal state which is what ultimately crippled the business when interest rates started to rise.

It wasn’t until new leadership came in and introduced some radical overhauls that things at Rolls-Royce started to improve. This included massive companywide layoffs and non-core business disposals to desperately raise capital to get its overleveraged balance sheet under control.

The plan seems to have worked. It has been transformed into a cash-generating machine with impressive free cash flow margins and a return to operating profitability for the first time in years. With that in mind, it’s not surprising to see this FTSE 100 business valuation take off. Even more so now that dividends have also been restored after a five-year holiday.

Time to buy?

Seeing Rolls-Royce guide for £2.1bn-£2.2bn of free cash flow generation in 2024 is undeniably exciting. That provides a lot of financial flexibility to help pay down debts and keep its pension obligation in surplus. However, with £5.2bn of outstanding loan obligations, it may be a few years before management will be able to allocate large chunks of this newfound wealth into new projects.

In the meantime, there’s a rising concern relating to growth. A large driver of the firm’s surge in cash flow stems from the rebound in the long-haul travel market. But now that international travel has been restored to pre-pandemic levels, the recovery tailwinds have stopped blowing, which is expected to cause growth to slow down subsequently.

Rolls-Royce is certainly not a one-trick pony. And with solid revenue growth from its Defence and Power Systems segments looking on track to continue, this may prove sufficient to offset the slowdown in its Civil Aerospace arm. But it’s unclear to what degree as we move into 2025 and beyond.

At a price-to-earnings ratio of 20.3, it seems that investor expectations are a bit lofty at the moment. That’s why I believe the opportunity to capitalise on Rolls-Royce’s rebound has likely passed. And at today’s price, this isn’t a business I’m tempted to add to my portfolio.