Rheinmetall's Robotics and Rocketry Push Faces Market Skepticism

While Rheinmetall's share price languishes near yearly lows, the German defense and technology group is accelerating its operational transformation on multiple fronts. The company is not only ramping up production of military hardware but also showcasing its expanding capabilities in robotics and autonomous systems, even as investors remain unconvinced.

The group recently launched series production of unmanned surface vessels at the historic Blohm+Voss shipyard in Hamburg. A newly formed joint venture, Rheinmetall Kraken GmbH, will initially build around 200 of the Kraken K3 Scout drone boats annually, with plans to scale capacity to 1,000 units per year. The 8.5-meter-long vessels can reach speeds exceeding 100 kilometers per hour and are currently remotely operated, with a path toward full autonomy. Tim Wagner, head of the naval division, confirmed initial NATO orders for the systems in March, highlighting a demand underscored by Ukraine's successful use of similar technology.

Simultaneously, Rheinmetall is pushing into new product lines. The company plans to establish a joint venture with partner Destinus in the second half of 2026, in which it will hold a 51% majority stake. This partnership aims to manufacture cruise missiles and ballistic artillery rockets at a site in Unterlüß, Lower Saxony. Management sees potential for near-term revenues in the high triple-digit million-euro range, with a long-term billion-euro market opportunity.

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

This operational momentum was on full display at the recent Hannover Messe industrial fair. Rheinmetall's exhibit featured a live teleoperation demonstration where an operator in Hannover remotely controlled vehicles at Düsseldorf Airport and on the fairgrounds in real time. Its subsidiary, Yardstick Robotics, presented the "YARO" cobot, designed for rugged outdoor use. A concrete pilot project launching in May will see Rheinmetall and MIRA GmbH operate a teleoperated shuttle service with Rheinbahn AG between Düsseldorf Airport's train station and terminal.

Financially, the company's outlook appears robust. Management targets 2026 sales of up to €14.5 billion, with an operating margin of around 19%. Analysts, on average, project an even higher figure of €14.7 billion. Over 90% of the planned revenue is already secured by orders, providing rare visibility in the sector. Shareholders will vote on a proposed dividend of €11.50 per share at the Annual General Meeting on May 12, a significant 42% increase from the previous year.

Despite these fundamentals, the market reaction has been tepid. The share price, trading around €1,437, sits just 5% above its 52-week low. Since the start of the year, the stock has shed more than 10% of its value and trades roughly a quarter below its last record high. Observers like Bernstein Research consider this discount overdone, maintaining a price target of €2,050 per share.

All eyes are now on two imminent events that could shift sentiment. Rheinmetall will report its first-quarter 2026 results on May 7, followed by the AGM. Whether the solid operational progress and increased shareholder payout can finally lift the stock will likely depend on how well the quarterly figures meet the market's high expectations.

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