Rheinmetall’s €73 Billion Backlog Faces a Test as Berlin Tightens the Purse Strings
Published on 07/28/2026 at 22:11 | Redaktion boerse-global.de
The German defence sector is staging a coordinated rebound, and Rheinmetall is leading the charge. Shares in the Düsseldorf-based arms maker jumped 3.32% on Tuesday to €1,095.00, moving in lockstep with peers Hensoldt and Renk. The synchronized rally points to a return of institutional buyers after a period dominated by geopolitical jitters and budget wrangling in Berlin.
Yet for all the recent momentum — the stock has gained 11.73% over the past month — Rheinmetall remains deep in the red for 2025, nursing a year-to-date decline of 29.47%. The gap between the share price and analyst expectations is striking: the consensus price target sits at roughly €1,698, implying more than 50% upside from current levels.
A Budget Squeeze Where It Hurts Most
Just as the stock finds its footing, a fresh headwind has emerged from an unlikely direction. According to a Bloomberg report, Germany’s draft budget for 2027 allocates roughly €9.6 billion for ammunition purchases, down from approximately €11 billion this year. For Rheinmetall, whose fortunes are tightly tied to tanks, artillery, and munitions, that proposed cut is a sensitive nerve.
The figures remain preliminary — the budget process is still underway — and Germany’s overall defence spending is expected to rise in the medium term. But the shift within individual line items has unnerved investors who had piled into the defence sector on expectations of sustained procurement growth.
Should investors sell immediately? Or is it worth buying Rheinmetall?
A €73 Billion Backlog Offers Some Cover
Despite the budgetary clouds, Rheinmetall’s order book tells a different story. The company’s backlog stands at €73 billion, up roughly 31% year-on-year. That cushion provides a buffer against near-term fiscal uncertainty, but it hasn’t been enough to prevent the stock from sliding since its all-time high in early October 2025.
The disconnect between a bulging order pipeline and a depressed share price remains a central puzzle for market watchers. One explanation may lie in the nature of the backlog itself: large, multi-year contracts that take time to convert into revenue and profit, leaving the stock vulnerable to sentiment shifts on future orders.
Two Tests Loom This Week
All eyes now turn to Thursday, 6 August, when Rheinmetall publishes its second-quarter results. Analysts are pencilling in an operating margin of around 19%, and investors will scrutinise the order intake closely. Cancellations on individual projects had rattled the market in previous months, and any sign of stability on that front would be welcomed.
A second uncertainty factor is China. Beijing recently placed Rheinmetall on an export-restriction sanctions list. While the direct economic impact is considered limited, the political dimension adds a layer of supply-chain risk that the market is watching.
Volatility Signals Caution
The stock’s annualised 30-day volatility stands at 68.12%, underscoring how sharply Rheinmetall reacts to political signals and new contract announcements. The relative strength index of 55.9 suggests the shares are neither overbought nor oversold, leaving room for movement in either direction depending on what the quarterly report reveals.
Rheinmetall at a turning point? This analysis reveals what investors need to know now.
Rheinmetall completed its transformation into a pure-play defence contractor in June 2026, selling off its last civilian automotive division to financial investor Aequita for roughly €350 million. The group now operates five military divisions, a structure management believes will deliver more stable margins over the long term.
Thursday’s numbers will provide the first hard data on whether that thesis is holding — and whether the current rally has legs or is merely a technical bounce.
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