Rheinmetall's Numbers Tell One Story, Its Share Price Another

Rheinmetall's 2025 revenue rose 29% to €9.9B, but shares have halved from October's high despite record backlog and strong 2026 guidance.

The disconnect between Rheinmetall's operational trajectory and its market valuation has rarely been starker. The defense group closed out 2025 with revenue up 29 percent to €9.9 billion and operating profit climbing 33 percent to €1.8 billion, while net income reached €0.8 billion — a 3 percent improvement. Management has guided for revenue growth of 40 to 45 percent in 2026. Yet the share price, hovering around €1,023–€1,042, sits roughly 5–7 percent below its 50-day moving average and has nearly halved from the 52-week high of over €2,000 touched in early October.

A Record Backlog That Raises Questions

The order book tells a story of extraordinary visibility. Rheinmetall's backlog hit an all-time high of €63.8 billion, and reports point to an expected order volume exceeding €100 billion for the group alone. Add another €25 billion-plus at partner company TKMS — including a €6.3 billion order for four MEKO A-200 frigates for Germany — and the pipeline represents a multiple of annual sales.

That scale, however, cuts both ways. Analysts note the stock trades at a projected price-to-earnings ratio of roughly 32.5 for 2026, a level some consider rich even after the recent pullback. Investors appear to be treating the steady drumbeat of contract announcements as routine, while focusing instead on questions around divisional profitability and project execution.

Small Contracts, Strategic Signals

The latest wave of US-related orders may be modest in dollar terms but speaks to deepening transatlantic integration. American Rheinmetall received a contract from Kongsberg Defence & Aerospace to manufacture components for MCT-30 turrets used in the US Marine Corps' ACV-30 vehicle program — work valued at around $710,000, to be produced in Michigan with deliveries scheduled for 2026 and 2027. Rheinmetall Canada, meanwhile, is supplying spare parts for the MSU-200NAV to the US Navy under a contract in the single-digit millions of euros, with deliveries running through 2028. A separate order for replacement components for US Navy mobile ground launchers adds to the flow, alongside a reported $710,000 Kongsberg award for machined components.

These figures barely register against Rheinmetall's billion-euro contracts, but their frequency underscores how deeply the group is woven into American defense supply chains.

Regulatory Wins and Program Setbacks

Technical milestones are also accumulating. The Bundeswehr's flight certification authority has granted provisional airworthiness approval for the LUNA NG unmanned reconnaissance system, enabling the German military to conduct independent training and test flights without external clearances. Rheinmetall has also reportedly handed over the first Lynx XM30 prototype vehicle to the US Army, a significant step in the ongoing American armored vehicle competition.

On the infrastructure front, the company plans a new logistics center at the Airport North Hesse Defence Hub in Kassel and has secured its first order for a modular camp under the German Armed Forces Contractor Augmentation Program II in Lithuania.

Not everything is running smoothly. The F126 frigate project was halted in June after Dutch partner Damen Schelde missed its timeline and budget targets. Costs had ballooned to nearly €13 billion, with €2.4 billion already spent. The MEKO A-200 concept from TKMS is now slated as the replacement — but at €1.6 billion per vessel, roughly 60 percent above the original unit cost. For the Peene shipyard in Wolgast, employing around 400 people and owned by Rheinmetall, the situation brings uncertainty as the group evaluates alternatives.

The Raw Material Dimension

The defense boom is also drawing attention to supply-chain vulnerabilities. Niobium, a metal whose production is heavily concentrated in Brazil, is emerging as a potential bottleneck for the industry at large. Rheinmetall does not yet face acute operational challenges from this, but the discussion highlights how geopolitical dependencies are intertwined with the sector's growth trajectory.

What Investors Are Watching

Deutsche Bank reaffirmed its Buy rating on Rheinmetall last Tuesday with a price target of €1,800 — considerably more optimistic than the current market price. Management will have opportunities to make its case at upcoming investor gatherings, including the Morgan Stanley Industrial CEOs unplugged session and Tuesday's Jefferies Industrials Conference.

The €1,000 level looks set to remain a key psychological reference point in the near term. For now, the market seems to be weighing record order books and robust growth against valuation concerns and project-specific setbacks — a tension that no single contract announcement has yet resolved.