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1. Company Snapshot

1.a. Company Description

Rheinmetall AG provides technologies to the mobility and security sectors worldwide.The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade.The Vehicle Systems segment offers combat, support, logistics, and special vehicles, including armored tracked vehicles, CBRN protection systems, turret systems, and wheeled logistics and tactical vehicles.


The Weapon and Ammunition segment provides threat-appropriate, effective and accurate firepower, and protection solutions, such as large and medium-caliber weapons and ammunition, weapon stations, protection systems, and propellants and powders.The Electronic Solutions segment offers a chain of systems network, such as sensors, networking platforms, automated connected effectors for soldiers, and cyberspace protection solutions, and training and simulation solutions.Its products include air defense systems; soldier systems; command, control, and reconnaissance systems; fire control systems; sensors; and simulations for the army, air force, navy, and civil applications.


The Sensors and Actuators segment provides a portfolio of products comprising exhaust gas recirculation systems; throttle valves, control dampers, and exhaust flaps for electromotors; solenoid valves; actuators and valve train systems; oil, water, and vacuum pumps for passenger cars, commercial vehicles, and light and heavy-duty off-road applications; and industrial solutions.The Materials and Trade segment focuses on the development of system components for the basic motors, such as engine blocks, structural components, and cylinder heads; plain bearings, and bushes; and replacement parts.It also engages in the aftermarket activities.


The company was formerly known as Rheinmetall Berlin AG and changed its name to Rheinmetall AG in 1996.Rheinmetall AG was founded in 1889 and is headquartered in Düsseldorf, Germany.

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1.b. Last Insights on RHM

Rheinmetall's recent performance has been negatively impacted by investors' expectations not being met. Despite a "good year" in 2025 with strong organic growth in defense and expanding profitability, the company's earnings forecast for 2026 fell short of market expectations. The planned sale of its automotive business to become a pure-play defense group and aggressive capacity expansion with new munitions plants have not been enough to impress investors. Additionally, a production disruption at its Murcia site and high growth expectations have contributed to the negative sentiment.

1.c. Company Highlights

2. Rheinmetall AG: 2025 Earnings – A Defensive Powerhouse with a Robust Backlog

Rheinmetall AG posted a solid 2025 performance, recording €9.97 billion in sales and an operating result of €1.84 billion, translating into an 18.5 % operating margin. Earnings per share rose to €25.28, up 3.6 % from the prior year, while a €11.5 billion dividend was proposed, reflecting a 40 % payout ratio. The company’s free cash flow climbed 15 % to €1.22 billion, supporting a strong liquidity stance. The staff highlighted that the margin expansion was largely driven by high‑margin Electronic Solutions, earning €2.5 billion in revenue with a 45 % growth [1].

Publication Date: Apr -21

📋 Highlights
  • Record Sales and Margin:: Achieved EUR 10 billion sales, with an operating margin of 18.5% (EUR 1.841 billion profit), driven by strong defense demand.
  • Backlog and Order Growth:: EUR 64 billion backlog (+36%), book-to-bill ratio over 200%, and EUR 26.4 billion in new orders (+9%) signal robust future revenue.
  • Defense Segment Expansion:: Electronic Solutions surged 45% to EUR 2.5 billion; Weapon and Ammunition growth hit EUR 1 billion in operating results.
  • Cash Flow and Dividend:: Operating free cash flow rose 15% to EUR 1.218 billion; proposed EUR 11.5 dividend reflects confidence in EUR 5.6 billion equity buffer.
  • Future Growth Targets:: 2026 sales guided at EUR 14-14.5 billion (+40-45% YoY), with operating margin expanding to 19% and EUR 70 billion backlog target in sight.

Order Backlog & Growth

The order backlog surged 36 % to €64 billion, with a book‑to‑bill ratio exceeding 200 %. Excluding automotive, the backlog stands at €64 billion, bolstered by an additional €5‑6 billion from the newly acquired Naval Systems and €12 billion in potential nominations. International business opportunities add roughly €16 billion. The company projects 2026 sales of €14‑14.5 billion, a 40‑45 % growth rate, and anticipates a 19 % operating margin.

Defense Segments

Defense drives the growth: Electronic Solutions grew 45 %, Vehicle Systems added nearly €1 billion, and Weapon & Ammunition rose 27 % to over €1 billion in operating profit. Air defense production aims at 400 units annually, with low incremental investment needs, while the drone business can scale to 40,000 units per year. Partnerships with OHB and potential Lockheed joint ventures expand the company’s footprint into space and missile systems.

CapEx & Cash Flow

Capital expenditures are slated at 16 % of revenue in 2026 and 12‑13 % in 2027, potentially lower than originally planned. Operating working capital sits at €500 million, and the equity ratio improved to 33.5 % after converting 83 % of Series B convertibles. Net debt/EBITDA is negative at –0.17, underscoring a robust balance sheet that enabled the Naval Systems acquisition.

Outlook & Valuation

3. NewsRoom

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European defense stocks cool as investors reassess war winners

Apr -20

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Rheinmetall (XTRA:RHM) Valuation Check After Recent Share Price Volatility

Apr -14

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European Stocks Fall in Monday Trading After US-Iran Peace Talks Collapse

Apr -13

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Persian Gulf Turmoil Blunts European Bourses Midday

Apr -13

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Rheinmetall, Destinus to Jointly Produce Missiles for Europe, NATO

Apr -13

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THEON Signs Strategic Agreement with RHEINMETALL for the Development and Supply of the PHYLAX Stabilized Multi-Sensor System

Apr -08

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2 Actively Managed Defense ETFs That Can Pivot as the War Evolves

Apr -01

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Rheinmetall (XTRA:RHM) Valuation Check After Recent Share Price Pullback And Lofty Growth Expectations

Mar -26

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.80%)

6. Segments

Vehicle Systems

Expected Growth: 4.8%

Rheinmetall AG's Vehicle Systems division is expected to grow driven by increasing demand for military vehicles, modernization of existing fleets, and emerging trends in electrification and autonomous systems.

Weapon and Ammunition

Expected Growth: 4.3%

Rheinmetall’s Weapon and Ammunition segment growth is driven by rising global defence spending, modernization of military equipment, and increasing demand for autonomous and AI-enabled weapon systems.

Power Systems

Expected Growth: 4.5%

Rheinmetall AG's Power Systems division is expected to grow driven by increasing demand for energy-efficient solutions, government initiatives promoting clean energy, and rising electrification in the industrial sector.

Electronic Solutions

Expected Growth: 6.3%

Rheinmetall AG’s Electronic Solutions for defense and security is expected to grow driven by increasing demand for modernized military communication systems, and rising adoption of advanced electronic warfare systems, as well as growing investments in digitalization and cyber security.

Others/ Consolidation

Expected Growth: 5.8%

Rheinmetall AG's consolidated growth is driven by increasing demand for military equipment, expanding civilian business, and strategic acquisitions, such as the purchase of Pierburg Pump Technology, enhancing its market position and revenue stream.

7. Detailed Products

Tanks and Tracked Vehicles

Rheinmetall's defence division produces a range of tracked vehicles, including main battle tanks, infantry fighting vehicles, and armoured recovery vehicles.

Artillery and Mortar Systems

Rheinmetall's artillery and mortar systems provide accurate and reliable firepower for military forces.

Electronic Solutions

Rheinmetall's electronic solutions include command and control systems, communication systems, and electronic warfare systems.

Ammunition and Propellants

Rheinmetall's ammunition and propellants include small-calibre ammunition, medium-calibre ammunition, and propellant systems.

Simulation and Training

Rheinmetall's simulation and training solutions include live simulation, virtual simulation, and constructive simulation.

Public Security and Civil Protection

Rheinmetall's public security and civil protection solutions include command and control systems, communication systems, and surveillance systems.

Automotive Components

Rheinmetall's automotive components include piston systems, engine bearings, and valve train components.

Scrap and Recycling

Rheinmetall's scrap and recycling solutions include metal recycling, scrap processing, and waste management.

8. Rheinmetall AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Rheinmetall AG operates in the defense and automotive industries, where substitutes are limited. However, the company faces some threat from substitutes in the automotive sector, particularly from electric vehicles.

Bargaining Power Of Customers

Rheinmetall AG's customers are primarily governments and large corporations, which have limited bargaining power. The company's strong relationships with its customers also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Rheinmetall AG relies on a diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company may face some pressure from suppliers in the automotive sector, particularly those providing specialized components.

Threat Of New Entrants

The defense and automotive industries have high barriers to entry, making it difficult for new entrants to compete with established players like Rheinmetall AG. The company's strong brand and established relationships with customers also deter new entrants.

Intensity Of Rivalry

The defense and automotive industries are highly competitive, with several established players competing for market share. Rheinmetall AG faces intense rivalry from companies like Lockheed Martin, BAE Systems, and Continental AG.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.72%
Debt Cost 7.58%
Equity Weight 66.28%
Equity Cost 7.58%
WACC 7.58%
Leverage 50.87%

11. Quality Control: Rheinmetall AG passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Safran

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Growth: 4.1

Quality: 7.3

Yield: 0.6

Momentum: 8.5

Volatility: 8.3

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Thales

A-Score: 5.0/10

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Yield: 3.1

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Airbus

A-Score: 5.0/10

Value: 1.9

Growth: 5.6

Quality: 5.2

Yield: 1.2

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BAE Systems

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Value: 2.4

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Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 6.0

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Rheinmetall

A-Score: 4.9/10

Value: 0.2

Growth: 8.6

Quality: 6.2

Yield: 2.5

Momentum: 10.0

Volatility: 2.0

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A-Score: 4.8/10

Value: 1.9

Growth: 6.4

Quality: 6.6

Yield: 0.6

Momentum: 9.5

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1431.0$

Current Price

1431$

Potential

-0.00%

Expected Cash-Flows