Rheinmetall Shares Stay Grounded Despite Hundreds-of-Millions Euro Bundeswehr Order and Record Backlog

Rheinmetall shares drift near yearly lows and 22% down YTD, even as a new Bundeswehr order and €73B backlog fail to lift sentiment. Cash flow woes weigh.

Rheinmetall's stock continues to drift near its 52-week lows even as the German defence group books a fresh triple-digit million euro order and sits on a €73 billion contract backlog. The shares changed hands at €1,235.40 late on Wednesday, down 0.2% on the day and more than 22% below where they started the year. At just 10.5% above the mid-May trough of €1,118, the stock is trading far closer to its floor than to the September 2025 peak of €1,995.

The latest piece of good news — a Bundeswehr call-off for several tens of thousands of LLM-VarioRay laser-light modules to equip Germany's new assault rifle — failed to provide any lasting lift. Rheinmetall said the net order value runs into the hundreds of millions of euros, with deliveries stretched from 2026 through 2032. The contract will be booked in the second quarter of this year. The modules are designed for target marking and illumination, part of a broader modernisation push for tactical infantry kit. Yet after a brief morning spike above €1,250, the stock surrendered all gains by the afternoon.

Market participants have become harder to impress. The group's order book has ballooned from €56 billion a year ago to €73 billion, a sum that for the first time includes roughly €5.5 billion from the newly integrated Naval Systems division. But the share price reaction tells a different story: the stock is trading 38% off its 52-week high and well below both its 50-day moving average of €1,390 and its 200-day moving average of €1,638. Technical indicators flash caution, with the relative strength index hitting 90 — deep in overbought territory on a short-term basis.

Investors will have plenty of chance to quiz management this week, as Rheinmetall appears at the dbAccess European Champions Conference in Frankfurt and the Erste Group event in Warsaw. The talking points will be the first-quarter numbers released on 7 May. Revenue came in at €1.938 billion, up 8% year-on-year but slightly below consensus, while the operating margin of 11.6% met expectations. Earnings per share landed at €2.42. The problem area is cash: operating free cash flow swung from a positive €243 million in the prior-year quarter to a negative €285 million. Rheinmetall blames lower customer advance payments, inventory build-up and higher working-capital needs tied to planned revenue growth — an explanation that sounds plausible but will require some selling on the conference circuit.

Segment performance is uneven. Air Defence posted the strongest growth, with sales rising €57 million to €192 million and operating profit nearly doubling to €30 million, driven by Skynex and Skyranger projects for European clients. Vehicle Systems advanced moderately, while Weapon and Ammunition stayed roughly flat compared with last year.

Analysts still see significant upside from current levels. The average price target stands at €1,886, roughly 50% above the trading price, with Barclays overweight at €2,035 and UBS at €1,600. The dividend is expected to climb to €15.18 per share for 2026, up from €11.50 for the prior year. Rheinmetall has reaffirmed its full-year guidance: group sales between €14.0 billion and €14.5 billion with an operating margin of around 19%.

The next hard data point is the half-year report due on 6 August. Until then, the market will watch whether the promised ramp-up in ammunition and air-defence deliveries, plus the Naval Systems integration, start showing up in measurable figures — and whether the record backlog can finally translate into share price momentum instead of just headline numbers.