Hensoldt Doubles Orders and Lifts 2030 Target, But a Cash Flow Squeeze Keeps the Stock Under Pressure

Defence sensor specialist Hensoldt posts strong Q1 growth with orders doubling and revenue up 25%, but negative free cash flow from €1B investment plan sends stock 36% below highs.

Hensoldt’s operating engine is firing on all cylinders: order intake doubled, revenue surged by a quarter, and management has just raised its long-term sales goal to €6 billion by 2030. Yet the defence sensor specialist finds itself in an uncomfortable spot — its free cash flow turned negative in the first quarter, and the stock has been left nursing a 36% loss from its 52-week high.

The cash flow deterioration stems from a deliberate strategy. Hensoldt is pumping roughly €1 billion into capacity expansion between 2025 and 2027, with around 1,600 new hires planned this year alone. That aggressive investment outlay, combined with lower customer advances, dragged the free cash flow conversion rate down to around 40% in the first three months of 2026 from 77% a year earlier. The result: a negative free cash flow reading that stands in stark contrast to the headline numbers.

Those headline numbers are hard to ignore. First-quarter revenue jumped 25% to €496 million, while order intake more than doubled to €1.48 billion, pushing the book-to-bill ratio to an exceptional 3.0. The order backlog swelled 41% year-on-year to a record €9.8 billion, driven by big contracts for the Puma and Schakal platforms as well as follow-on orders for Eurofighter Mk1 radars. Adjusted EBITDA came in at €44 million, representing an 8.9% margin, and the company reaffirmed its full-year guidance: around €2.75 billion in revenue with an adjusted EBITDA margin of 18.5% to 19.0%.

Beyond the near-term outlook, Hensoldt has laid out a more ambitious long-range target. The new €6 billion revenue goal for 2030 builds on the existing expansion blueprint, which includes the acquisition of Dutch optronics specialist Nedinsco. That deal, expected to close by mid-2026 pending regulatory approval, will be funded entirely from existing cash and bolsters Hensoldt’s high-precision sensor capabilities. Meanwhile, the company has secured a long-term supply agreement for nearly one million gallium-nitride chips — a critical component for next-generation radar systems and a commodity that has become increasingly scarce.

The stock, however, has yet to reflect the operational momentum. Trading at around €73.82, the shares are down roughly 36% from a 52-week peak of €115.10 and sit about 12% below their 200-day moving average. The relative strength index recently touched 80.5, flagging short-term overbought conditions after a weekly gain of just over 4%. Analysts remain broadly bullish: the consensus from 15 ratings is “Outperform,” with an average target of €90.70. J.P. Morgan is the most cautious at €85, while Deutsche Bank leads the pack at €101.

Shareholders will get their chance to air any grievances at the annual general meeting on May 22, where a dividend of €0.55 per share is up for approval — a proposal that may draw attention given the stock’s weak price performance. Further ahead, a potential catalyst could come from Canada, which is expected to decide on a submarine programme worth more than €10 billion in the first half of the year. Hensoldt, as a sensor supplier, would be well positioned to capture a slice of that long-term contract. The half-year report on July 31 will be the next key test: if free cash flow can stage a recovery, the current disconnect between operational strength and market valuation might finally begin to close.