Rheinmetall stock advances as defense demand supports record order backlog and higher earnings

Rheinmetall stock is closely tied to defense spending, and the German technology group (ISIN DE0007030009) has reported rising sales and earnings in its latest published financial results, supported by a record order backlog in its defense business and continued demand for ammunition and armored vehicles. According to its most recent available full-year figures for fiscal 2023, Rheinmetall generated sales of around EUR 7.2 billion, an increase of roughly 12% compared with about EUR 6.4 billion achieved in 2022, underlining how sharply the company has been scaling its production footprint to meet customer demand.

Revenue up double digits

In the fiscal year 2023, Rheinmetall reported consolidated sales of approximately EUR 7.2 billion, up from about EUR 6.4 billion in 2022, which corresponds to growth of roughly 12% year on year as the group ramped defense output and continued to expand its civilian automotive activities. The company highlighted that its order backlog also reached a record level, with total contracted work in hand climbing toward the EUR 40 billion mark at the end of 2023, compared with a backlog closer to EUR 30 billion a year earlier, reflecting multi-year contracts for ammunition, artillery systems, and armored vehicles.

Operating profitability improved as well. Rheinmetall reported an operating result (often referred to as operating profit or EBIT before special items) in the high hundreds of millions of euros for 2023, increasing versus the prior year when the figure had been somewhat lower, supported by higher capacity utilization in defense plants and an improved product mix. That translated into a higher operating margin for the group, moving from a mid-single-digit percentage level in 2022 to a higher mid-single-digit range in 2023, illustrating that the top-line growth is increasingly accompanied by operating leverage.

Earnings and backlog drive outlook

Net income attributable to shareholders for 2023 rose as well, supported by stronger operating earnings and a comparatively stable financial result. Compared with 2022, when attributable net profit was in the low hundreds of millions of euros, Rheinmetall was able to push this figure toward the mid-hundreds of millions in 2023, showcasing the financial impact of its expanded defense contracts and improved cost structure. Earnings per share (EPS) for 2023 therefore increased significantly compared with the prior-year level, reflecting both higher net income and a largely stable share count.

The defense segment remains the primary driver of growth. In 2023, Rheinmetall's defense-related divisions together generated the majority of group sales, with defense revenue rising at a double-digit percentage rate versus 2022 as governments in Europe and other regions raised procurement budgets for ammunition, artillery shells, armored vehicles, and air-defense solutions. By contrast, the company’s automotive-related operations delivered more modest growth, with sales up by a mid-single-digit percentage compared with 2022, as volumes recovered alongside global vehicle production and as Rheinmetall expanded its portfolio in areas such as thermal management and electrification components.

Armored vehicles and ammunition programs

A central element of Rheinmetall's growth story is its portfolio of armored vehicles and ammunition systems. The company is a key supplier of infantry fighting vehicles and main battle tank components to several NATO countries and partners, and it has received multi-year framework contracts for vehicle fleets and upgrades. These contracts are often measured in the billions of euros over their duration, and they contribute to the record order backlog reported for 2023, which climbed toward EUR 40 billion compared with roughly EUR 30 billion at the end of 2022. Ammunition orders, including artillery shells and propellant charges, have also increased substantially as European armed forces seek to replenish stocks.

Beyond heavy land systems, Rheinmetall also produces air-defense solutions, including radar-guided gun systems and missile integration, as well as training and simulation equipment for armed forces. In addition, its automotive-related segments supply pistons, engineered components, and thermal management systems that support both traditional combustion engines and electric powertrains. The diversification between defense and automotive helps stabilize the group’s overall revenue base. Nevertheless, defense now clearly dominates both sales and earnings growth, as visible in the double-digit percentage increase in 2023 defense revenue versus a lower growth rate in the automotive activities.

Rheinmetall stock and market context

Rheinmetall shares are primarily listed in Germany and are traded on electronic platforms such as Xetra in euros. In recent trading, the stock price has been positioned close to the upper area of its twelve-month trading range, reflecting investor expectations that the elevated defense spending environment in Europe will persist over the medium term. The company’s market capitalization, calculated by multiplying the share price by the number of outstanding shares, has risen accordingly compared with its level two to three years ago, driven by both earnings growth and a re-rating of the defense sector.

From a valuation perspective, investors often compare Rheinmetall's price-to-earnings ratio and enterprise value-to-EBIT multiples with those of other European defense contractors. As earnings per share have increased from 2022 to 2023 and order visibility has improved with a backlog approaching EUR 40 billion, the company’s forward-looking valuation reflects expectations of continued revenue growth and margin expansion. The dividend policy also plays a role in the investment case: with higher net income in 2023 compared with 2022, the distributable profit pool has grown, giving Rheinmetall flexibility to balance dividend payments, potential share buybacks, and capital expenditures in additional capacity for ammunition and vehicles.

Defense systems portfolio

One of Rheinmetall's best-known product families is the Boxer armored vehicle platform, which serves in various configurations such as infantry fighting vehicle, command post, and ambulance for several armies. The vehicle has been selected in multiple international procurement programs, contributing to Rheinmetall’s long-term revenue streams and order backlog as configurations are adapted and upgraded over time. The company also supplies the 120-millimeter smoothbore gun used in several variants of the Leopard main battle tank, along with associated ammunition, which remains a key revenue source as countries modernize their armored formations.

In ammunition, Rheinmetall produces artillery shells in calibers such as 155 millimeter, mortar rounds, and large quantities of small- and medium-caliber ammunition for land and naval systems. The surge in orders for artillery ammunition in recent years has been a major factor in the double-digit revenue growth for 2023 and the substantial increase in backlog compared with 2022. To support this demand, Rheinmetall has been investing in expanding manufacturing capacity at several sites, aiming to boost annual output of artillery shells over the next few years.

Rheinmetall stock trading level

On the Xetra trading venue, Rheinmetall stock has in recent sessions traded at a level that positions it relatively close to its twelve-month high in euro terms, while remaining well above the twelve-month low level set in the earlier part of the comparison period. This reflects both the company’s improved financial performance, with 2023 sales up roughly 12% year on year and backlog nearing EUR 40 billion from around EUR 30 billion in 2022, and investor confidence that defense demand will stay elevated. The stock therefore continues to serve as a liquid proxy for European land-defense exposure for many market participants.