Rheinmetall's Order Pipeline Keeps Expanding, But the Share Price Still Has a Mountain to Climb

Rheinmetall's record €80.5B backlog and US drone deals contrast with a share price 40% off its peak, as naval targets hold despite F126 setback.

The defense giant's order book has crossed the €80 billion threshold for the first time, yet investors remain fixated on a share price that sits 40 percent below its October peak. That tension — between relentless operational momentum and a bruised equity story — defines Rheinmetall's current chapter.

The latest addition to the backlog comes from Copenhagen. Rheinmetall has secured a contract from the Danish armed forces for its MASS soft-kill ship protection system, covering frigates of the Absalon and Iver Huitfeldt classes as well as the Royal Danish Navy's weapons school. Deliveries are slated to begin in the fourth quarter of 2027, with the order already booked in the second quarter of 2026. The decoy launcher system, hardly a niche product anymore, now counts more than 400 units in service across 18 navies worldwide.

That Danish deal joins a steady stream of mid-sized contracts that, taken together, have pushed the order backlog to a record €80.5 billion at the end of the second quarter. Management's target of €100–120 billion by year-end 2026 looks increasingly attainable given the current pace of order intake.

A Portfolio Spreading Across Domains and Borders

The company's diversification strategy has moved well beyond its traditional land-systems stronghold. On Monday, Rheinmetall announced the signing of a development contract with the US Army under its "Project Sustainment" initiative, tasking American Rheinmetall with developing autonomous, hybrid-powered unmanned ground vehicles over an 18-month period. That follows an August 10 announcement naming Rheinmetall as systems integrator for Boeing's MQ-28 Ghost Bat unmanned combat drone platform — an agreement building on a March partnership aimed at accelerating Germany's Collaborative Combat Aircraft program.

In the drone segment, an April framework agreement covering autonomous reconnaissance and attack drones has already generated an initial call-off worth approximately €300 million. Production will be based entirely within the EU, a point Rheinmetall emphasizes in the context of European sovereignty over defense technology.

The company is also courting Washington more aggressively. A memorandum of understanding with Lockheed Martin, signed in July, covers joint production of ATACMS systems at the Unterluess site. Production ramp-up is planned for 2027, though CEO Armin Papperger has cautioned against expectations of a rapid scale-up — replenishing US inventories, he noted, cannot be accomplished within two years. First revenues from that venture are not expected until 2028.

Naval Ambitions Persist Despite Setback

Tuesday brought confirmation of the Naval Systems division's long-term targets: roughly €5 billion in revenue with an operating margin of about 15 percent by 2030. That guidance stands despite the German defense ministry's cancellation of the F126 frigate program last month, which forced Rheinmetall to trim its full-year forecast by €300 million to a range of €13.7–14.2 billion. The group's 19 percent margin target remains untouched.

Rather than retreat, Rheinmetall is now pitching its GMF140 frigate design to the US Navy in pursuit of a multibillion-dollar contract — a direct response to the F126 loss that underscores the company's willingness to chase opportunities beyond its home market.

The Equity Story Remains Cautious

The shares closed Tuesday at €1,211.80, down 0.4 percent on the day but roughly 10 percent above their 50-day moving average. Over the past month, the stock has gained 23 percent, recovering from the sharp sell-off triggered by August's guidance cut. The weekly gain stands at 3.1 percent.

Still, the recovery has a long way to go. The stock remains 40 percent below its 52-week high of €2,007.00 set in early October, and it is down 22 percent year-to-date. Individual contract wins from Denmark and the Bundeswehr do little to alter that overall picture, but they send a signal: new business continues to flow despite setbacks on major programs.

Winter Decisions Loom Large

The near-term focus, however, is on bigger fish. December 9 marks the parliamentary consideration of the Arminius-Boxer major order in the Bundestag — a firm order volume of roughly €25 billion, of which Rheinmetall's share would be approximately €12.4 billion. Contract signing is expected a few days later, with final negotiations set for the second week of September. A potential service contract for Boxer fleet maintenance, carrying a Rheinmetall share of around €2 billion, could follow in January 2027.

The Bundeswehr has also expanded its medical capabilities through Rheinmetall, with a supplementary order for mobile rescue stations worth more than €500 million gross. That extends an earlier order by 149 units to a total of 165 systems, bringing the overall value of these medical facilities to over €600 million gross. Production is scheduled to start in the first quarter of 2027.

These individual contracts may appear modest next to billion-euro programs, but their cumulative effect is what keeps the order book swelling. The F126 cancellation, while painful, increasingly looks like an isolated blemish on a portfolio that spans land systems, naval platforms, drones, and unmanned air vehicles across multiple national borders — a breadth that gives Rheinmetall considerable resilience as it navigates a pivotal winter of procurement decisions.