Hensoldt’s Record Backlog Fails to Lift the Stock as Cash Flow Bites

Defence electronics firm Hensoldt posts record orders and revenue growth, but negative free cash flow and unchanged guidance trigger a 3.21% share price drop.

The disconnect between Hensoldt’s operational strength and its share price performance has rarely been starker. The defence electronics group posted a blockbuster first quarter, with order intake nearly doubling to €1.5 billion, yet investors sent the stock sliding 3.21% to €74.88 on Friday.

The new contracts, largely driven by Bundeswehr orders for infantry fighting vehicles and Eurofighter radars, pushed the order backlog to a fresh all-time high of €9.8 billion. Revenue climbed 25% to €496 million, while adjusted operating profit improved to €44 million. On the surface, the numbers tell a story of a company firing on all cylinders.

So why the selloff? The culprit lies in the balance sheet. Hensoldt reported negative free cash flow for the quarter, as heavy investment and rising working capital consumed cash reserves. The market’s disappointment was compounded by the fact that management merely confirmed its existing full-year guidance rather than raising it, dashing hopes among some investors for a more ambitious outlook after such a strong start to the year.

The broader defence sector added to the headwinds. Profit-taking among peers such as Rheinmetall, combined with lingering hopes for diplomatic de-escalation, dragged Hensoldt lower in sympathy. Technically, the stock is now trading roughly 11% below its 200-day moving average, a level that chart watchers view as a bearish signal.

Analyst opinions remain sharply divided. Deutsche Bank sees the stock worth €101, while Barclays targets €95. At the other end of the spectrum, MWB Research has a price target of just €62, warning that much of the good news is already priced in and that further disappointments on guidance could trigger corrections.

Looking ahead, two key dates are on the horizon. On 22 May 2026, Hensoldt will hold its virtual annual general meeting, where shareholders will vote on a proposed dividend of €0.55 per share. If approved, the payout is scheduled for 27 May. Later in the year, the company expects to complete its acquisition of Nedinsco, a Dutch optronics specialist, in a move designed to strengthen supply chains and add technological depth. For now, though, the market is waiting for the cash flow story to improve before it rewards the record order book.