Rheinmetall’s €64 Billion Backlog Can’t Stop the Slide to a 52-Week Low

Rheinmetall shares hit one-year low as supply chain worries overshadow record orders; analysts see 60% upside ahead of Q1 results and AGM in May.

The disconnect between Rheinmetall’s operational muscle and its stock market performance has rarely been starker. The Düsseldorf-based defence contractor is sitting on an order backlog of roughly €64 billion, yet its shares slumped to €1,341.20 last Friday — the lowest level in a year. That marks a decline of more than 16% since the start of 2025, with the stock now trading about 20% below its 200-day moving average and roughly a third off its 52-week high of nearly €2,000.

The sell-off accelerated on Friday, with the stock shedding nearly 5% in a single session. Market participants are wrestling with a paradox: the company’s factories are running hot, the defence industry is booming, and yet the share price keeps sinking. The number of member companies in the German defence industry association BDSV has doubled to 550 since the outbreak of the war in Ukraine, with 100 new firms joining since last November alone. Rheinmetall sits at the centre of this expansion as a key systems integrator for government procurement programmes.

Supply Chain Worries Weigh on Sentiment

Behind the stock’s weakness lies a concern that goes beyond valuation multiples. Chief Executive Armin Papperger has flagged the company’s reliance on Chinese raw materials — specifically cotton linters, a critical input for propellant production. Rheinmetall sources a significant portion of this material from China, and while Papperger insists the group is not pursuing a strict “China-free” policy, the company is preparing for scenarios where Chinese exports could be cut off. Alternatives have been identified in Argentina and Australia, and the group is investing in its own production capacity for precursor materials. Internal supply chain reviews are now conducted on a weekly basis, underscoring how seriously management takes the geopolitical risk.

Analysts, however, view the recent price drop as overdone. Jefferies has reiterated a price target of €2,220, implying upside of more than 60% from current levels. The bank’s bullish stance is based on the company’s strong fundamentals and the structural growth in defence spending.

Two Key Dates in May

The near-term catalyst calendar is packed. On 7 May, management will release first-quarter results, with analysts expecting earnings per share of €2.90. The focus will be on order intake and margin trends, particularly whether new contracts can dispel the scepticism that has built up around the company’s guidance. For 2026, Rheinmetall is targeting group sales of up to €14.5 billion with an operating margin of around 19%. Revenue visibility stands at over 90%, underpinned by long-term framework agreements.

Five days later, on 12 May, the annual general meeting will take place. The board has proposed a dividend of €11.50 per share, which would mark the fourth consecutive increase. On the technology front, the second quarter will see the start of the qualification phase for new autonomous drone systems, with serial deliveries from major drone contracts scheduled for the first half of 2027 — a development that should secure production line utilisation well into the medium term.

For now, the market is demanding proof that the order book will translate into margins and cash flows at the pace investors expect. The Q1 numbers on 7 May will be the first test of whether the stock can break out of its downward spiral.