Rheinmetall’s €1 Billion Bundeswehr Order Fails to Stop the Bleeding as Share Price Hovers Near a 52-Week Low

Rheinmetall wins €1.04B German army contract for soldier systems, but shares languish near yearly lows despite surging revenue and a €63.8B backlog.

The Düsseldorf-based defence group Rheinmetall has secured another billion-euro contract from the German military, yet the stock continues to trade close to its lowest level in a year. The Bundeswehr has ordered additional units of the “Infanterist der Zukunft” soldier system, a deal worth roughly €1.04 billion gross, which will equip thousands more troops with advanced kit including IT components, optics, and protective vests. The order also covers modernisation of existing inventories and includes a new helmet-mounted laser warning system that alerts soldiers when enemy sensors lock onto them.

Despite the fresh injection of business, Rheinmetall shares managed only a modest 1.31 percent gain on Monday, rising to €1,358.80. That leaves the stock roughly 15 percent lower since the start of 2025 and just above its 52-week trough of around €1,347 — a far cry from the September peak of €1,995. The disconnect between the company’s operational momentum and its market valuation has rarely been starker.

Revenue for the 2025 financial year jumped 29 percent to nearly €10 billion, while the order backlog swelled to €63.8 billion. Management has guided for a further 40 to 45 percent revenue increase in 2026, targeting €14.0 billion to €14.5 billion. Yet the market remains sceptical. With a forward price-to-earnings ratio above 43 for the current year, any hint of margin pressure is swiftly punished. Barclays analyst Afonso Osorio has warned of a sluggish start to the year across the defence sector, forecasting weak first-quarter earnings and negative cash flow.

A less-discussed risk lurks in the supply chain. Rheinmetall sources a significant portion of its cotton linters — a key raw material for propellant production — from China. Chief executive Armin Papperger has said the company does not pursue a strict China-free policy but is preparing for scenarios where Chinese exports could be cut off. A complete solution to that dependency has yet to be found.

Investors are now looking to two key dates in May. On the 7th, Rheinmetall will publish its first-quarter 2026 results. Analysts expect earnings per share of €39.61 on average, more than double the prior-year figure. The focus will be on margins and new order intake. Five days later, on 12 May, the virtual annual general meeting will take place, where the board has proposed a dividend of €11.50 per share — the fourth consecutive increase.

The analyst community remains broadly constructive despite the share price weakness. Bernstein’s Adrien Rabier maintains an “outperform” rating with a price target of €2,050, arguing that the recent sell-off has priced in a worst-case scenario. The average target, according to aktien.guide, sits between €2,040 and €2,140, implying upside of roughly a third from current levels. Whether the 7 May numbers can shift the prevailing pessimism will depend largely on whether margins can live up to elevated expectations.

Rheinmetall is aiming for total order intake of around €80 billion for the full year. The Bundeswehr contract, booked in the spring after the budget committee approved the necessary funds, largely exhausts the current tranche, though smaller follow-on orders remain possible. For now, the company’s factories are running at full throttle, but the stock market is waiting for proof that the earnings engine can keep pace.