Rheinmetall’s €73bn Backlog and a Record Dividend Mask a Revenue Miss

Rheinmetall proposes record €11.50 dividend despite shares near year lows, backed by €73bn order backlog and analyst price targets implying 40% upside.

Rheinmetall shareholders are set for a hefty payout next week, even as the defence group’s shares languish near their lowest levels of the year. The board has proposed a dividend of €11.50 per share for the 2025 financial year, a 42% increase on the prior year’s distribution. The proposal will be put to a virtual vote at the annual general meeting on 12 May, with the cash due to land in accounts on 15 May. The ex-dividend date is set for 13 May, meaning investors must hold the stock by the close of the AGM to qualify.

The record payout comes at a time when the stock is trading at €1,415, down nearly 12% since the start of the year and well adrift of its 52-week high of €1,995. The weakness reflects a first-quarter revenue miss that has tempered some of the euphoria surrounding the sector. Revenue for the three months to March rose 7.7% to €1.94bn, falling short of the market consensus of roughly €2.3bn. UBS analyst Sven Weier described the shortfall as a “cleansing effect” and maintained his buy rating with a price target of €2,200.

The operating picture is more encouraging. The group’s operating margin improved to 11.6% from 10.5% a year earlier, while operating profit climbed to €224m. For a quarter that is traditionally the weakest of the year, the margin performance has given analysts reason to look past the revenue disappointment. Barclays retains its “overweight” stance with a €2,125 target, while Bernstein sticks with “outperform” and a fair value of €2,050. Across more than 23 analysts, the average price target sits at roughly €2,053, implying upside of more than 40% from current levels.

The real story, however, lies in the order book. Rheinmetall’s backlog has swelled to around €73bn, underpinned by a recent €5bn nomination and the first-time inclusion of contracts from its newly formed naval division. In late April, the group secured a multi-billion euro framework agreement with the German armed forces for autonomous loitering munition systems, with an initial call-off worth roughly €300m gross. Management is standing by its full-year guidance of 40% to 45% revenue growth and an operating margin of around 19%.

Analysts caution that the second half will need to be significantly stronger to hit those targets, given the production cycle. The detailed first-quarter figures due on 7 May will be closely watched for signs of progress, particularly on the order backlog and the ramp-up of new capacity. Among the key projects is a munitions factory in Lithuania, which is scheduled to begin operations in the middle of 2026.

The convergence of a record dividend, a €73bn order mountain, and a near-term earnings update creates an unusual tension for investors. The AGM on 12 May will offer a platform for management to address the revenue miss head-on, while the Q1 release just days earlier will provide the hard data to back up the narrative. For now, the market is pricing in scepticism, but the analyst community sees a gap that is too wide to ignore.