Rheinmetall’s €135 Billion Backlog and €3.4 Billion Romania Order Fail to Lift Stock From Year Lows

Rheinmetall shares near 52-week low despite record backlogs and €3.4B Romanian Lynx deal. CEO buys shares, analysts say correction overdone amid strong European defence cycle.

Rheinmetall is fighting a two-front war: one in the procurement corridors of Europe, the other on the trading floor. While the German defence group flags record order books and a string of high-value government tenders, its share price languishes dangerously close to a 52-week nadir. At Friday’s close of €1,123.80, the stock has shed nearly 30% since the start of the year, leaving it just 0.52% above the year’s worst level.

The disconnect could not be starker. On the Black Sea Defence & Aerospace show in Bucharest, Rheinmetall paraded its wares — tanks, howitzers, small-calibre ammunition and electronic systems — with the Lynx KF41 infantry fighting vehicle as the centrepiece. Romania selected the Lynx in late April for a procurement programme worth €3.4 billion, covering 298 vehicles. A win would mark the Lynx’s foothold in another Nato member state and reinforce export prospects for the system. Bucharest has financial backing: the European Union granted Romania a €16.6 billion credit line in January under the SAFE programme, with €9.5 billion earmarked for military modernisation.

Yet the market has barely reacted. The pullback on Friday alone was 2.01%. The stock now trades 43.67% below its 52-week high, and chart technicians warn that a breach of the year low at €1,118.00 could trigger further selling.

Operationally, the group continues to expand its footprint beyond its traditional land-systems core. The acquisition of NVL has added four shipyards in northern Germany, including the historic Blohm+Voss site, and brought around 2,100 employees into a newly created Naval Systems division. In its first reporting month of March, the marine segment contributed €77 million to group revenue, much of it from state shipbuilding programmes. Meanwhile, ammunition production is ramping up: artillery shell capacity is on track to reach 1.5 million rounds per year by the end of the decade, and tank ammunition capacity should hit 240,000 rounds from 2027.

The first-quarter numbers, released in May, told a mixed story. Revenue rose 8% to €1.94 billion, but missed elevated consensus expectations. Earnings before interest and tax climbed 17% to €224 million, yielding an operating margin of 11.6%. Goldman Sachs analyst Sam Burgess attributed the revenue shortfall to timing: pre-built trucks and ammunition from the new plant in Murcia are expected to be delivered in the current quarter. Management held its full-year forecast steady, targeting revenue of €14 billion to €14.5 billion and an operating margin of roughly 19%.

Chief executive Armin Papperger has put his own money on the line, buying shares worth more than half a million euros from private funds. Barclays analysts argue the sector-wide correction is overdone, maintaining an “overweight” rating on Rheinmetall and insisting the long-term European defence cycle remains intact. They see the group as one of the primary beneficiaries, with the order backlog potentially swelling to around €135 billion by the end of 2026.

Shareholders have already pocketed some reward: at the virtual annual general meeting in mid-May, the dividend was lifted to €11.50 per share. But the near-term catalyst rests on whether Romania converts its Lynx preference into a firm contract, and whether the second quarter delivers the promised acceleration in both revenue and order intake. Without a swift chart-technical vindication, the gap between full order books and an empty share price may only widen.