Rheinmetall's CEO Pay Surge and Naval Drone Launch Spotlight a Valuation Gap

Rheinmetall CEO compensation soars to €10.2M for 2025 as the defense giant forecasts up to 45% sales growth by 2026, yet its stock trades 25% below its peak.

Rheinmetall CEO Armin Papperger's compensation skyrocketed to €10.2 million for 2025, placing him sixth among Germany's blue-chip leaders. This figure, more than ten times the average DAX CEO pay and two-and-a-half times his prior year's earnings, underscores the defense giant's booming business. Yet this executive windfall contrasts sharply with the stock's performance, which continues to trade significantly below its recent peak.

The company's operational momentum is undeniable. Management forecasts 2026 sales between €14.0 and €14.5 billion, representing potential growth of up to 45%. With an impressive 91% of this target already secured by existing orders and an expected operating margin of around 19%, the fundamental picture appears robust. This strength is fueling expansion beyond traditional domains, including a signed letter of intent to build a satellite testing center in Norway's Andøy municipality.

A key new growth vector is now operational in Hamburg. At the Blohm+Voss site, Rheinmetall has officially launched series production of the "Kraken K3 Scout," an 8.5-meter unmanned surface vessel. Built by the Rheinmetall Kraken GmbH joint venture, the drone boat can reach speeds of 55 knots and is configurable for surveillance, critical infrastructure protection, or as a weapons platform. Initial annual capacity is set at 200 units, with Division-CEO Tim Wagner stating scalability to 1,000 systems is possible based on demand.

Despite these strategic advances, investor sentiment remains cool. The share price, hovering around €1,502, sits roughly 25% below its 52-week high of €1,995 and below all key moving averages. Since the start of the year, the stock is down approximately 8%. Chart analysts note a death cross formed in December and identify the €1,600 level as the next significant technical resistance.

Equity analysts, however, see substantial upside. Bernstein Research maintains an "Outperform" rating with a €2,050 price target, arguing the current share price already discounts conservative scenarios while the structural defense cycle remains intact. Berenberg reiterates its buy recommendation and a €2,100 target, highlighting industrial scalability as a core value driver.

The company is actively showcasing this technological edge, making its debut at the Hannover Messe this week. On a 1,200-square-meter stand, around 40 group companies will present production technologies for the defense sector, with CEO Papperger participating in a panel on AI, autonomous systems, and hypersonic weapons.

All eyes now turn to the first-quarter report due on May 7, 2026, for concrete validation. Analysts anticipate earnings per share around €39.61, which would mark a staggering 166% increase. The figures for order intake and margin development will be scrutinized to confirm the bullish outlook. The market's verdict will determine if Rheinmetall's operational firepower can finally ignite its stagnant share price.