Rheinmetall’s Record Orders and Telecom Tie-Up Do Little to Lift a Stock at 12-Month Lows

Rheinmetall is running a race between operational momentum and market sentiment — and the market is winning. The German defence group posted a first-quarter order book of €73bn, a record that includes the newly consolidated Naval Systems unit, yet its shares have tumbled to a 52-week low. The disconnect between the company’s growing backlog and its shrinking valuation has become the central tension for investors.

The numbers themselves leave little to criticise. Revenue rose to €1.94bn in the first three months of the year, while operating profit climbed 17% to €224m, lifting the margin to 11.6% from 10.6% a year earlier. Earnings per share from continuing operations advanced to €2.18 from €1.78. Those figures reflect not just higher volumes but also improved cost efficiency as production scales up.

The order book, up from €56bn at the same point in 2025, provides exceptional visibility. Some €5.5bn of the total comes from the newly formed Naval Systems segment, a business built through recent acquisitions that reduces the company’s dependency on individual land-based programmes. That diversification is a deliberate part of Chief Executive Armin Papperger’s strategy to transform Rheinmetall into a broad-based security technology provider.

Shareholders will benefit directly from the operational strength. The management has proposed a dividend of €11.50 per share, up sharply from €8.10 last year, putting the payout ahead of many peers in the European defence sector. The resolution will be voted on at the virtual annual general meeting.

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

Yet the stock continues to slide. On Monday it closed at a 12-month low of €1,183, and on Tuesday it fell a further 3.43% to €1,143.40, pushing the year-to-date decline to 28.6%. The share price now sits 42.69% below its September peak and 31.19% below its 200-day moving average. The market appears to be pricing in execution risk on the very orders that management is celebrating.

Against this backdrop, Papperger is pushing ahead with a strategic pivot that goes beyond traditional munitions and armoured vehicles. At the AFCEA security fair in Bonn, Rheinmetall is showcasing a “Battlesuite” designed to integrate multi-domain operations across land, sea, air and cyber. The system connects different branches of the armed forces and incorporates modern drone solutions.

The company also announced a strategic alliance with Deutsche Telekom. Under the partnership, Rheinmetall will contribute specialised sensors and defence technology while Telekom brings secure cloud infrastructure, networks and data analytics. The joint system is designed to protect critical infrastructure from hybrid threats, sabotage and drone attacks — a growing concern for governments across Europe.

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

The management remains confident about the full year. Rheinmetall is guiding for group revenue of between €14bn and €14.5bn, with an operating margin of around 19%. The strong demand for air-defence systems such as Skynex and the massive need for artillery ammunition are expected to provide further tailwinds.

The immediate test, however, is whether the promised large-scale contracts will be booked in the current quarter. If they land in the order book soon, the record backlog could serve not only as a safety net but also as the foundation for a margin story that the market is still refusing to buy.

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Rheinmetall Stock: New Analysis - 12 May

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