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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 impacted by delays in German defense procurement decisions, which have slowed sales growth. Despite a robust 17% growth in Defence sales and a significant order backlog, the company faces challenges in cash flow and market conditions. Additionally, the recent share price surge has raised concerns about valuations, with some investors questioning the sustainability of the rally. Furthermore, hopes for a peace deal in Ukraine have led to a selloff in European defense stocks, including Rheinmetall.

1.c. Company Highlights

2. Rheinmetall Delivers Stellar Q1 2025 with 46% Revenue Surge, Defense Dominance

Rheinmetall kicked off 2025 with a robust financial performance, driven by its defense segment's exceptional growth. The company reported group sales of €2.305 billion, a 46% year-over-year increase, with defense sales surging 33% to €1.795 billion. Operating margins for the defense business reached a record 11.5%, while the group operating margin stood at 8.7%. However, the civilian business continued to struggle, with sales declining 7% and margins at a modest 1.8%. Armin Papperger, CEO, highlighted the company's strong operational free cash flow of €454 million and a solid CapEx of 6.6%, underscoring Rheinmetall's ability to execute and invest in growth initiatives.

Publication Date: May -12

📋 Highlights
  • Defense Sales Growth: Defense sales surged by 33% to €1.795 billion, driving overall group sales up 46% to €2.305 billion.
  • Operating Results Improvement: Defense operating results rose 96% to €206 million, with margins reaching a record 11.5%.
  • Backlog Expansion: The backlog increased 56% to €62.56 billion, with nominations up 181% to €11 billion.
  • Lockheed Martin Joint Venture: A joint venture with Lockheed Martin targets €5 billion in annual sales, addressing European missile production gaps.
  • European Production Expansion: Rheinmetall is expanding production in Romania, Latvia, and Lithuania, targeting 4 million medium-caliber rounds annually.

Strategic Momentum and Record Backlog

Rheinmetall's backlog grew 56% to €62.56 billion, with nominations up 181% to €11 billion, driven by key frame contracts in Germany, including €8.5 billion for ammunition and €12 billion for digitization. The company expects significant down payments as these frame contracts transition to fixed agreements. Rheinmetall also announced a joint venture with Lockheed Martin to address missile production gaps in Europe, with production set to begin in 2026 and potential annual sales of €5 billion. Additionally, a joint venture with ICEYE for SAR satellite technology aims to produce the first satellite by the end of 2026, further diversifying Rheinmetall's portfolio.

Expansion and Capacity Building

Rheinmetall is actively repurposing civilian plants for defense production, with facilities in Berlin, Neuss, and other locations ready for immediate use. The company is expanding production capacities across Europe, including new facilities in Romania, Latvia, and Lithuania, targeting 4 million medium-caliber rounds annually. Air defense production is also being ramped up to 150 systems per year. Rheinmetall remains confident in its market share, expecting over 50% in ammunition and around 30% in the broader European defense market.

Valuation and Strategic Outlook

With a P/E ratio of 96.57 and an EV/EBITDA of 41.69, Rheinmetall's valuation reflects high growth expectations. The company's strong free cash flow yield of 1.36% and ROIC of 10.01% highlight its ability to generate returns on investments. Rheinmetall's net debt-to-EBITDA ratio of 0.7 indicates a manageable debt profile. The company aims to exceed €30 billion in sales by 2030, with potential upside to €40 billion if all contracts materialize. Rheinmetall's strategic initiatives, including its joint ventures and capacity expansions, position it well to capitalize on growing demand in Europe and beyond.

3. NewsRoom

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Google, Airbus and European defense stocks: Trending stocks

Dec -01

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Rheinmetall's Record Profits May Be Its Greatest Risk Yet

Dec -01

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European Equity Bargains Valued Below Estimated Worth In December 2025

Dec -01

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The Outspoken CEO Behind the World’s Fastest-Growing Arms Maker

Nov -29

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North America Ammunition Market Report by Caliber, Product, End Use, Country and Company Analysis, 2025-2033

Nov -27

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Is Rheinmetall’s Recent Share Price Drop an Opportunity Ahead of Major Defense Contracts?

Nov -26

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Rheinmetall (XTRA:RHM) Valuation: Gauging Long-Term Value After Recent Share Price Surge

Nov -26

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European Defense Stocks Fall After U.S. Hails Ukraine Progress

Nov -24

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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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Yield: 4.4

Momentum: 9.5

Volatility: 6.3

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Yield: 3.1

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Rheinmetall

A-Score: 4.9/10

Value: 0.2

Growth: 8.6

Quality: 6.3

Yield: 2.5

Momentum: 10.0

Volatility: 2.0

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Growth: 6.4

Quality: 6.6

Yield: 0.6

Momentum: 9.5

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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

1529.5$

Current Price

1529.5$

Potential

-0.00%

Expected Cash-Flows