Rheinmetall's Order Book Hits New Highs, But Profits Can't Keep Pace
Published on 07/10/2026 at 14:34 | Redaktion boerse-global.de
The disconnect between Rheinmetall's dealmaking machine and its stock price has rarely been starker. The Düsseldorf-based defence contractor has racked up a string of major contracts in recent weeks — from a laser weapon system for the German Navy to a landmark agreement with Lockheed Martin to produce ATACMS missiles outside the US for the first time. Yet the share price keeps sliding, battered by a first-quarter earnings miss and growing concern over how long it will take to convert a bulging order book into cash.
On 9 July, Rheinmetall and MBDA Germany signed a contract with the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support for a high-energy laser weapon system. The deal, valued in the mid-three-digit million-euro range, covers the entire kill chain from reconnaissance and target tracking to engagement. The system is slated for operational deployment by 2029, with the two companies forming an ARGE HEL joint venture to deliver it. A dedicated joint company is currently being established. Protecting naval vessels against drone swarms is the priority, a capability NATO allies are racing to field.
Just a day earlier, Rheinmetall announced a joint venture with Croatia's DOK-ING to turn the country into a hub for unmanned defence technology in Europe. And on 7 July, the group signed a memorandum of understanding with Lockheed Martin to set up an ATACMS production line at Rheinmetall's Unterlüß site — the first such facility outside the United States. That came on the heels of a €5.7 billion artillery order from Romania in June, the largest international contract in Rheinmetall's recent history, as the group pushes toward annual production of 1.5 million rounds of 155mm ammunition by 2030.
Should investors sell immediately? Or is it worth buying Rheinmetall?
The stock, however, is trading at just under €996, down roughly 38% since the start of 2026. Over the past seven sessions it has lost 9.3%, and on a monthly basis the decline stands at 16.8%. From the 52-week high of €1,995 set in September 2025, the shares have been nearly halved. The current price is barely 10% above the 52-week low of €902.50 reached on 25 June.
That gap between headlines and share price reflects a shift in investor priorities. For months, European defence stocks rallied on political pledges to boost military spending. Now the market wants to see those pledges translate into higher margins and free cash flow. Rheinmetall missed profit forecasts in the first quarter of 2026, even though operating earnings rose. A strategic inventory build-up ate into cash flow, and analysts expect an improvement only in the second quarter. The 30-day volatility stands at 68.8%, underscoring persistent nervousness. The relative strength index of 37.4 points to oversold conditions.
Investors are also factoring in the long lead times embedded in these contracts. The laser weapon system will not generate revenue until the end of the decade. The Romanian order will be delivered over several years. Joint ventures in Croatia and ATACMS production require years of investment before they bear fruit. The market is effectively asking what the group's cash flow profile looks like today — not what its order book promises tomorrow.
The next test comes on 6 August, when Rheinmetall releases second-quarter results. If the expected cash-flow improvement materialises, it could help close the gap between operational momentum and market sentiment. Until then, the slide in the stock suggests that even a blizzard of billion-euro deals is not enough when the numbers that matter most have yet to arrive.
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