Rheinmetall's €6.7 Billion Order Haul Fails to Reverse a Bruising Stock Slide

Rheinmetall's share price falls 25.69% YTD despite record €73B order backlog and €6.7B in new contracts. Q1 results miss, but analysts remain positive on defense focus.

For a defence contractor that bagged two of its largest contract awards within a single week, Rheinmetall's share price tells a deflating story. The stock closed Friday at €1,190.00, leaving it down 25.69% since the start of the year and 33.28% lower over the past twelve months. The disconnect between a swelling order book and a tumbling equity has become the defining narrative around the German group.

Rumänien handed Rheinmetall its biggest single international package on 29 May 2026: €5.7 billion worth of Lynx infantry fighting vehicles, Skyranger air-defence systems, medium-calibre ammunition, and naval vessels including two offshore patrol boats and two diver support boats. Deliveries are scheduled between 2028 and 2030, financed through the EU's SAFE programme. The company plans to invest several hundred million euros in Romania and create hundreds of new jobs.

Days earlier, the Bundeswehr placed an order for more than 2,000 protected and unprotected UTF transport vehicles worth roughly €1.015 billion. The vehicles will support logistics and material transport for national and alliance defence, reinforcing Rheinmetall's status as a core supplier to Germany's military.

In total, the two deals represent around €6.7 billion in new work — yet the market barely blinked. The worry is not demand, but execution: converting those orders into revenue and cash flow at a pace that justifies the share's valuation.

A Strategic Pivot Gaining Speed

Alongside the new contracts, Rheinmetall is shedding its civilian legacy. The Power Systems division, which supplied auto-industry components, is being sold to Munich-based AEQUITA for €350 million. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approval. The move sharpens the group's focus entirely on defence, freeing capital and management attention for the military side of the business where political budgets are rising fastest.

Q1 Numbers That Disappointed

The scale of the order backlog is undeniable. At the end of March it stood at €73 billion, up from €56 billion a year earlier — roughly five times the planned full-year revenue. But the first-quarter results that preceded the latest contract wins fell short of analyst expectations.

Revenue rose 8% to €1.938 billion, while operating profit improved 17% to €224 million, yielding an operating margin of 11.6%. The figures missed consensus, partly because of timing delays. Management pointed to truck handovers in Germany that slipped into the second quarter and a restart of ammunition production at a Spanish plant. Those shifts, the company said, are temporary.

For the current financial year, Rheinmetall continues to target revenue between €14.0 billion and €14.5 billion, with an operating margin of roughly 19%.

Analyst Views: Optimism Tempered by Caution

Despite the stock's weakness, sell-side analysts remain broadly constructive. No firm covering the stock recommends selling, though several have trimmed their price targets.

• UBS lowered its target to €1,600.
• Jefferies cut its target to €1,890.
• Barclays stuck with its €2,035 target and an "Overweight" rating, forecasting a 45% rise in operating profit for the full year — well above the sector average of about 19%.

The average analyst price target sits around €1,890, implying significant upside from current levels. Berenberg highlights the group's high earnings visibility: roughly 62% of next year's revenue is already covered by firm orders, a figure that rises to approximately 72% when existing framework agreements are included. The bank expects new defence orders this year could reach as much as €80 billion.

Next Catalysts: ILA Berlin and the Half-Year Results

Rheinmetall will have a major platform to showcase its expanded portfolio at the ILA Berlin air show from 10 to 14 June. It is the first time the company presents under its new, defence-only structure. Highlights include the FV?014 loitering munition with a range of up to 100 kilometres, a weapon for which the Bundeswehr already has a billion-euro framework contract. Also on display: Ghost Bat drones, SAR satellites, and the Skyranger system.

The show may bolster confidence in the product pipeline, but the market's real test comes on 6 August, when Rheinmetall reports half-year results. Investors will be looking for evidence that the delayed truck deliveries and the Spanish munitions production are contributing meaningfully to the top line. Only then can the widening gap between record orders and a battered share price begin to close.