Rheinmetall’s €73bn Order Backlog Fails to Shield Stock From 30% Plunge as Delivery Delays Mount

Rheinmetall's record €73bn order backlog fails to lift shares, down 30% YTD. Analysts split on buying opportunity as operational results remain solid.

The defence group has never had so much work on its books. Yet its shares are trading near a 52-week low, hammered by a growing disconnect between operational strength and market sentiment. Rheinmetall’s order backlog hit an all-time high of €73bn in the first quarter — a figure that could swell to €80bn by year-end — but the stock closed Friday at €1,120.80, leaving it down 30.02% since January.

The slide accelerated after the company’s annual general meeting on 12 May and the subsequent dividend payment of €11.50 per share on 15 May. The payout landed in a weak market phase, with the equity shedding 7.16% over seven days and 26.08% over the month. The latest close sits barely above the recent trough of €1,118.00, underscoring how little the record pipeline has done to shore up the price.

Some analysts are now calling the pullback a buying opportunity. Warburg Research upgraded its rating from “Hold” to “Buy”, even as it trimmed its price target modestly. The team argues that after the sharp correction the risk/reward equation has shifted back in investors’ favour. Berenberg echoed that view, describing the current valuation as attractive and pointing to the high visibility on future revenues: framework agreements already cover nearly three-quarters of the expected sales for 2027. JPMorgan struck a more cautious chord, downgrading the stock to “Neutral”, citing the complexity of the ongoing expansion.

Operationally, the numbers remain solid. First-quarter group operating profit rose 17% to €224m, while the operating margin improved to 11.6%. Revenue reached €1.94bn, though that figure fell short of analyst estimates, highlighting the execution friction that has weighed on sentiment. Administrative inspections and logistical bottlenecks have slowed deliveries, most notably in the powder business where acceptance controls temporarily halted sales worth €100m, according to AlphaValue.

The core driver remains the war in Ukraine and the resulting surge in demand from NATO allies for ammunition and armoured vehicles. The backlog now includes, for the first time, the Naval Systems segment, which contributes €5.5bn following the integration of Naval Vessels Lürssen. Rheinmetall is also pressing ahead with expansion into new domains. A planned joint venture for cruise missiles and ballistic rocket artillery has been announced, and a new drone production facility in Neuss is set to enter series production in the near term.

On 11 May the company unveiled a partnership with Deutsche Telekom to develop a multi-threat protection system aimed at safeguarding cities and critical infrastructure from hybrid attacks such as sabotage and drone incursions. Rheinmetall will supply sensor technology and effectors, while Telekom contributes secure communication networks including 5G. The collaboration targets a market that is growing rapidly beyond traditional military applications.

For 2026, management is guiding for group revenue of €14.0bn to €14.5bn and an operating margin of roughly 19%. That ambition relies heavily on the group’s ability to convert the bloated order book into actual deliveries and cash flow. Until the logistical snags are resolved, the market is likely to remain cautious — and the stock’s recovery will depend on more than just a record backlog.