TKMS Stock: Record €25 Billion Backlog Meets a Sector-Wide Reality Check

thyssenkrupp Marine Systems raises guidance, wins €6.3B frigate deal, but shares fall 20% amid defense sector sell-off.

The contrast could hardly be starker. On one side sits a backlog that has swollen past €25 billion, a second consecutive upgrade to annual guidance, and a fresh endorsement from Bernstein Research that carries a price target nearly 45 percent above the prevailing share price. On the other, the stock itself keeps drifting lower, caught in a sector-wide downdraft that has little to do with the company's own operational momentum.

That tension — between a rapidly filling order book and a consolidating share price — now defines the investment case for thyssenkrupp Marine Systems (TKMS) as it heads into the final stretch of the calendar year.

A Backlog That Keeps Growing

The numbers tell a compelling story. For the first nine months of the 2025/26 fiscal year, TKMS reported revenue of €1,890 million, up 19 percent year on year, while adjusted EBIT climbed 13 percent to €110 million. Management used the occasion to raise its full-year outlook for the second time, now guiding for revenue growth of 10 to 12 percent — a meaningful step up from the 2 to 5 percent range previously communicated — with the adjusted EBIT margin expected to reach as high as 6.5 percent, versus an earlier target of just over 6 percent.

The same day, the company announced its largest surface-vessel contract ever: a deal with the German Navy for four MEKO A-200 DEU frigates, with options for four additional ships. That agreement, worth €6.3 billion, pushed the order book from €20.1 billion to more than €25 billion — equivalent to roughly eight years of revenue, according to calculations by mwb research. The research house responded by lifting its price target from €135 to €140 and reaffirming its buy recommendation.

Bernstein had moved just a day earlier, on August 13, raising its target from €76 to €125 and upgrading the stock from "Market-Perform" to "Outperform," citing the rapid accumulation of contracts.

Canada Looms as the Next Catalyst

Beyond Germany, the Canadian submarine program is shaping up as the next potential inflection point. Prime Minister Mark Carney designated TKMS as the preferred bidder for up to twelve Type 212CD submarines back on July 6, edging out South Korea's Hanwha Ocean. Carney reaffirmed in late August that TKMS remains one of two finalists.

Media reports suggest the contract could exceed €15 billion, including four decades of service support and the construction of port infrastructure. A signing is expected around year-end. Should Canada come through, mwb research estimates the order book could swell to more than €40 billion.

The company has also been deepening its European ties. A second memorandum of understanding with Spain's Navantia was signed in July, with the aim of establishing a joint framework for the production and marketing of selected submarine projects by year-end, pending regulatory approvals.

The Share Price Tells a Different Story

None of this, however, has prevented the stock from losing altitude. TKMS shares recently traded at €87.30, roughly 20 percent below the 52-week high of €108.80 reached on August 14 — the very day Bernstein published its upgraded target. A subsequent session saw the stock shed another 1.9 percent to €87.90, part of a broader sell-off in European defense names.

That particular decline was triggered by criticism from the Bundeswehr and the procurement agency BAAINBw over delays and quality issues in defense projects, which weighed on sentiment across the sector. Rheinmetall, RENK and HENSOLDT all lost ground as well. The DAX fell 1.38 percent to 26,205 points, pressured by rising oil prices amid the Iran conflict and growing expectations of a September rate hike by the US Federal Reserve. The EuroStoxx 50 gave up roughly one percent, with previously strong-performing defense stocks offering themselves up as candidates for profit-taking.

The recent weakness, analysts suggest, owes more to a natural consolidation after a strong run — the stock remains up 32 percent since the start of the year — than to any deterioration in the underlying business.

Competition Bites in Scandinavia

While German procurement woes weighed on sentiment, a separate development on the same day illustrated how international naval contracts can slip past TKMS. France's Naval Group signed a €4.3 billion deal with Sweden for four FDI frigates of the Luleå class, with deliveries scheduled between 2030 and 2034. Naval Group beat out Babcock and Navantia for the contract; TKMS was not named among the bidders.

The Swedish vessels will be equipped with Aster 30 and CAMM-ER air defense systems alongside Swedish onboard systems including RBS15 and Torped 47. A cruise missile capability is not included in the initial contract, though a retrofit option exists. Politically, the deal is being framed as part of NATO's broader Baltic Sea defense buildup — a domain where TKMS is active with both submarines and surface vessels, but where the Swedish prize went elsewhere.

France also ordered two Global Eye surveillance aircraft from Saab, valued at over €1 billion, and deepened its nuclear cooperation with Sweden. According to the FAZ, Berlin's frustration over the failed Franco-German fighter jet project is growing — a mood that could cast a shadow over the wider defense partnership between the two countries.

Israel's INS Drakon Keeps the Strategic Spotlight

Amid the day-to-day noise, an older TKMS project continues to attract attention. Israel's new submarine INS Drakon, delivered in July and built on the Dolphin II class by TKMS with German financial support, has sparked speculation about possible cruise missile capabilities due to its unusually large sail. Nothing has been confirmed, but the vessel serves as a reminder of TKMS's deep entanglement in strategically significant naval programs for international partners.

For investors, the picture is decidedly mixed: domestic procurement concerns collide with an international arena where competitors like Naval Group are landing billion-euro contracts that TKMS, at least in these specific tenders, is not winning. The stock, after recent losses, sits roughly 19 percent below its 52-week high but remains comfortably above its late-November trough of €56.75.

With Germany, Canada and potentially Spain all offering parallel growth tracks, the order book — not the daily share price — remains the metric that ultimately matters. The question is whether the market's patience will be rewarded before the consolidation runs its course.