Rheinmetall’s €73bn Order Book Can’t Shield Investors From a 20% Share Rout

The defence giant’s stock has been pummelled to a fresh 52-week low, even as the company flags a record order backlog and expanding margins. The disconnect between operational momentum and market sentiment has rarely been starker.

Shares in the Düsseldorf-based group slid another 4.39 percent on Friday to hit €1,290 — the lowest level in a year. That takes the year-to-date decline to roughly one-fifth, wiping out billions in market value. The sell-off accelerated after JPMorgan executed a sharp reversal on Thursday evening, downgrading the stock from overweight to neutral and slashing its price target from €2,130 to €1,500.

Analyst David Perry cited repeated revenue misses as the trigger. Rheinmetall has fallen short of consensus forecasts on the top line in recent quarters, prompting Perry to trim his earnings estimates for the coming years by as much as five percent. He also flagged that some investors harbour doubts about the group’s current product portfolio — concerns that, while not shared by the analyst himself, could cap any re-rating for now.

The bearish call stands in contrast to the view from other houses. Jefferies continues to recommend buying the stock with a €2,220 target, while Bernstein Research maintains its €2,050 price objective.

Should investors sell immediately? Or is it worth buying Rheinmetall?

A €73bn Backlog That Keeps Growing

The operational picture tells a markedly different story. Rheinmetall’s order book swelled to a record €73 billion by the end of March, buoyed by the integration of NVL, the naval shipyard acquired earlier this year. The new Naval Systems segment contributed around €77 million in revenue from new-build programmes in March alone, and the company is already pursuing the next step — a bid for German Naval Yards — with a long-term ambition to generate €5 billion in annual sales from the marine division by 2030.

Group operating profit rose 17 percent to €224 million, while the operating margin improved to 11.6 percent. Air defence was a standout, posting growth of more than 30 percent.

Yet not all of that expected revenue has materialised. Finished trucks worth €200 million were deferred at customer request into the second quarter, dragging operating free cash flow to minus €285 million. The group is also building inventory aggressively to fulfil upcoming orders. Management insists the cash position will turn positive over the full year.

A Dividend Test and a Broken Chart

Investor attention now shifts to the annual general meeting on 12 May, where shareholders will vote on a proposed dividend of €11.50 per share — a sharp increase that signals management’s confidence in future cash generation.

Rheinmetall at a turning point? This analysis reveals what investors need to know now.

The technical picture, however, remains deeply strained. The stock is trading more than 22 percent below its 200-day moving average. If the current support at the year’s low gives way, further downside could follow quickly.

For now, Rheinmetall is caught between a record order book and a market that wants proof — not promises — that the growth story can be delivered on time.

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