Rheinmetall’s €3.4bn Romanian Lynx Deal Fails to Halt a 22% Slide Ahead of Q1 Results

Rheinmetall's €63.8B order backlog and €3.4B Romanian Lynx deal fail to lift shares, down 22% from highs. Q1 results on May 7 and AGM dividend vote are key catalysts.

The disconnect between Rheinmetall’s bulging order book and its languishing share price is becoming harder to ignore. While the Düsseldorf-based defence group has been racking up contracts worth billions in recent weeks, its stock has tumbled more than 22% since late February, closing at €1,341.20 on 1 May — perilously close to its 52-week low of €1,309.80.

The latest piece of business is a whopper. Romania is pushing ahead with plans to replace its Soviet-era MLI-84 infantry fighting vehicles with Rheinmetall’s Lynx KF41, in a deal valued at roughly €3.4bn. The financing is being channelled through the EU’s SAFE programme, and the Romanian defence ministry submitted the project list to parliament for approval on 29 April. Bucharest is expected to become the second-largest beneficiary of the SAFE initiative, and it wants local industry heavily involved in the Lynx production.

That is not the only Romanian prize on the table. Rheinmetall is also emerging as the prime contractor for a naval programme worth more than €920m, covering four vessels — two multi-purpose patrol boats in a corvette configuration and two diver-support ships. The corvette design comes from the NVL Group, whose military arm Rheinmetall acquired in March 2026 and folded into a new “Naval Systems” division. The Romanian contract would be an early test of that unit’s capabilities.

Yet none of this has stirred the share price. A Goldman Sachs basket of European defence stocks has lost more than 5% at one point, with Rheinmetall and peers such as Hensoldt and Leonardo each shedding over 7%. The entire sector now sits roughly 11% below its 2026 highs, even as earnings estimates continue to climb.

The immediate catalyst for a potential reversal comes on 7 May, when Rheinmetall publishes its first-quarter results for 2026. Investors are looking for proof that margins are holding up and that supply chains remain intact. For the full year, management has guided for revenue growth of 40% to 45%, to between €14.0bn and €14.5bn, with an operating margin of around 19%. Analysts expect earnings per share of €39.61 on average for the year — a jump of roughly 166% from the prior year.

Five days later, on 12 May at 10:00 CEST, the company holds its virtual annual general meeting. The board is proposing a dividend of €11.50 per share for the 2025 financial year, up from €8.10 last year. Shareholders must hold the stock by 12 May to qualify for the payout; the shares will trade ex-dividend the following day.

The order backlog stands at a record €63.8bn, 36% higher than a year ago, and the book-to-bill ratio has exceeded 200%. Last week alone, Rheinmetall signed contracts worth more than €5bn. But the market remains fixated on geopolitical risk — signals from a Ukrainian official about progress toward a possible peace deal triggered sector-wide selling.

The consensus among 15 analysts remains constructive, with an average price target of €2,051 and a range of €1,450 to €2,500. Not one recommends selling. If the first-quarter numbers deliver the margin proof the market has been demanding, the valuation gap between operational reality and share price could begin to close.