Rheinmetall’s €360m Revenue Gap Tests Investor Patience as Order Book Hits €73bn

Rheinmetall’s first-quarter numbers landed with a thud — and the market is still wincing. The Düsseldorf-based defence contractor posted revenue of €1.938bn for the three months to March 2026, a 7.7 per cent improvement on the prior year but a full €360m short of the €2.3bn analyst consensus. The miss, however, came with a detailed explanation rather than a mea culpa.

Two factors conspired to create the shortfall. Pre-produced military trucks destined for a German customer will not be delivered until the second quarter, while an accident at the company’s munitions plant in Murcia, Spain, temporarily curtailed output. The resulting delay in ammunition shipments from the Spanish facility has also pushed revenue recognition into the following period.

The profit picture told a more reassuring story. Operating profit rose to €224m from €191m a year earlier, pushing the operating margin to 11.6 per cent — bang in line with market expectations. The earnings call scheduled for 14:00 CET on 7 May will give management a chance to flesh out the recovery trajectory.

Cash flow remains the sore spot. Free operating cash flow swung to minus €285m, weighed down by rising capital expenditure and a growing working capital base against a backdrop of low customer advance payments. The negative reading has raised eyebrows, though the company insists it reflects timing rather than any fundamental deterioration.

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

Management expects the logjam to clear in the current quarter. Production at Murcia has resumed, and the truck handover to the German client is on track. The full-year guidance stands unchanged: revenue growth of 40 to 45 per cent, an operating margin of around 19 per cent, and a cash conversion rate above 40 per cent.

The real headline-grabber sits on the balance sheet. The order backlog swelled to a record €73bn by the end of March, a 31 per cent jump from the same point last year. New segments such as air defence and naval systems contributed to the surge, alongside a single nomination worth €4.9bn. AlphaValue captured the mood neatly, noting that the structural defence theme and the massive order book remain intact — but that Rheinmetall is increasingly becoming an execution story.

Analysts have largely shrugged off the revenue miss. J.P. Morgan and Barclays both maintain “Overweight” ratings with price targets of €2,130 and €2,125 respectively. Goldman Sachs, Deutsche Bank and Jefferies also recommend buying the stock, each with targets above €2,100. The DZ Bank raised its price target slightly to €2,188, arguing that the weak first quarter reflects timing effects and a gradual capacity ramp-up rather than any structural headwind.

Rheinmetall at a turning point? This analysis reveals what investors need to know now.

The equity market has shown less forbearance. The shares trade at around €1,434, roughly 28 per cent below their 52-week high of €1,995 and down more than 10 per cent since the start of the year. The second quarter — with the expected production boost from Murcia and the vehicle delivery to the German customer — will test whether the promised acceleration materialises and keeps the full-year targets within reach.

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