Rheinmetall's Record Backlog Faces a Reckoning With Execution
Published on 09/26/2026 at 10:20 | Editorial boerse-global.de
Rheinmetall finds itself caught between two competing narratives. On one side sits an order book that has swollen past 80 billion euros, underpinned by fresh munitions contracts, naval service agreements and a growing pipeline of defense programs. On the other, a stock that closed Friday at 986.60 euros and has shed 36 percent since the start of the year, weighed down by operational stumbles and investor unease over the pace of government spending approvals.
The gap between those two realities has become the central question for anyone holding the DAX-listed defense contractor.
Analysts See Room to Run
The sell-side remains strikingly unbothered by the pullback. Berenberg reaffirmed its "Buy" rating on Thursday, attaching a 1,600-euro price target, with the analyst pointing to a recovering German economy as a counterweight to political noise. Earlier in the week, Bernstein Research had already kept its "Outperform" call and a 1,900-euro target in place. Both houses argue the company's fair value sits well above where the shares currently trade.
That conviction rests on a straightforward thesis: the structural rise in defense budgets across Europe will eventually flow through to Rheinmetall's top and bottom lines. Management has already banked a string of major project wins to support that view.
Should investors sell immediately? Or is it worth buying Rheinmetall?
Munitions and Naval Contracts Pile Up
On September 14, the company disclosed a substantial order for 155mm artillery ammunition from an international customer — a five-figure quantity of shells worth a low three-digit million-euro sum. Production is already underway, with completion slated for 2027.
The naval division has been equally busy. During a ceremony in Wolgast on September 14, German Defense Minister Boris Pistorius confirmed Berlin would order a fourth reconnaissance vessel, with the budget draft now working its way through parliament. Then on Wednesday, the Naval Systems unit secured a multi-year framework agreement from the General Customs Directorate covering overhaul, scheduled maintenance, emergency support and technical operational assistance for four new LNG customs ships.
Cracks Beneath the Surface
Yet the operational picture is not as clean as the order flow suggests. Rheinmetall has guided toward a significantly negative operating free cash flow for the current fiscal year — a signal that converting backlog into revenue is proving costly and slow.
Media reports have flagged schedule slippage on key programs. Delivery of the Skyranger 30 air-defense system is expected to slip by a full year, from mid-2026 to mid-2027. More troubling still is the Schwerer Waffenträger Infanterie project, covering 123 wheeled vehicles worth 2.7 billion euros in total. That contract is running at least eleven months behind schedule, a delay attributed to insufficient maturity and quality defects. Questions over potential flaws in protective plating have added to the pressure, casting a shadow over the broader German defense sector.
Rheinmetall at a turning point? This analysis reveals what investors need to know now.
Long-Term Demand Intact
None of this has dented the underlying appetite for military hardware. The total order backlog exceeds 80 billion euros, and new business kept arriving through the summer. Rheinmetall captured a share worth close to one billion euros in the Omnia Training consortium for British combat training, and it is modernizing the frigate BAYERN for the German Navy in a project valued in the mid three-digit million-euro range.
Whether the shares can close the distance to those ambitious analyst targets now hinges largely on how quickly management can resolve the quality issues and deliver on contracts already signed — and on how fast Berlin turns its budget plans into actual spending.
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