Rheinmetall's US Army Win Barely Registers as Analysts Eye 95% Upside

Rheinmetall's $20.7M US Army order for 3,104 MK93 mounts is just 0.13% of 2026 revenue guidance, as the stock sits 39% lower year-to-date.

A $20.7 million contract from the US Army — roughly EUR 18.05 million — landed in American Rheinmetall's order book this week, yet the Düsseldorf defence group's shares barely stirred. At EUR 951.90, the stock remains pinned near the bottom of its recent range, a far cry from the round EUR 1,000 mark it has been unable to reclaim.

The award, routed through the Defense Logistics Agency alongside partner ADS, covers the production of 3,104 new MK93 weapon mounts plus the refurbishment of 245 existing systems. Work will be carried out at the company's facility in the US state of Maine, with deliveries scheduled to begin in 2026 and run through October 2027.

Set against Rheinmetall's projected 2026 revenue of EUR 13.7 billion to EUR 14.2 billion, the deal accounts for a mere 0.13% of expected volume — a rounding error for a conglomerate of its scale.

A Stock Under Pressure

That muted reaction reflects broader unease rather than any disappointment with the contract itself. Since the start of the year, the share price has shed 39%, leaving it 53% below its 52-week high. A trimmed revenue forecast and nagging doubts about how quickly the company can convert its hefty backlog into delivered hardware have weighed on sentiment across the entire sector.

On Thursday the stock traded down 1.0% at EUR 946.80, having touched an intraday low of EUR 945.50 on Tuesday before steadying just above that level on XETRA a day later.

Fresh turbulence has arrived from the scuppered F126 frigate programme. Dutch shipbuilder Damen has written to the German Bundestag demanding close to EUR 4.7 billion in damages, accusing Berlin of breach of contract. At the same time, Defence Minister Pistorius intends to claw back EUR 2.3 billion in investments already made from the shipyard.

Valuation vs. Execution

Despite the relentless correction, market watchers point to the stock's historically cheap valuation and see roughly 95% upside from current levels, framing the weakness as a buying opportunity underpinned by full order books and rising state defence budgets.

Whether such a re-rating materialises hinges largely on how swiftly and profitably Rheinmetall can work through its existing major contracts in the coming quarters — a question that has kept many investors on the sidelines.

Swiss Exports and the Long Game

The international business continues to provide ballast. Data from Switzerland's State Secretariat for Economic Affairs shows that of CHF 2.77 billion in approved war materiel exports for 2025, CHF 1.96 billion went to three Rheinmetall subsidiaries and a joint venture. Rheinmetall Air Defence alone accounted for approvals exceeding CHF 1.6 billion.

An analysis by the weekly newspaper WOZ underscores the group's outsized role in Swiss defence exports. Oliver Dürr, CEO of Rheinmetall Air Defence, told broadcaster SRF that deliveries to Saudi Arabia proceed once approval is granted. In two months, Swiss voters will decide on a proposed loosening of the country's war materiel law.

CEO Armin Papperger has his sights set far beyond the current turbulence. Annual revenue stood at just under EUR 5 billion a decade ago and now approaches EUR 10 billion; by 2030, he aims for EUR 50 billion. The Bundeswehr is expected to supply much of that growth — Papperger estimates that as much as 40% of Germany's EUR 100 billion special fund could flow to Rheinmetall, keeping its capacity booked for years.

Hedging the Supply Chain

Running alongside the order boom is a quieter effort to shore up supply lines. Following Chinese export controls in 2025 that forced Western manufacturers to cut output, Rheinmetall outlined countermeasures in a September investor presentation: higher safety stocks, alternative raw materials and a wider supplier base. The company is not, however, hoarding its own reserves of rare earths — a point POLITICO highlighted as German firms broadly stockpile materials ahead of potential new trade restrictions, with the International Energy Agency noting how concentrated rare-earth processing has become.

For all the optimism about long-term demand, the near-term story remains one of a company whose order pipeline is humming while its share price struggles to find a floor.