Rheinmetall sales surge 36% in 2024, as company forecasts 'major' military order boom
Rheinmetall AG has seen a 175% stock price increase over the past year, driven by its strong defense portfolio and Europe's changing security landscape. Despite the impressive rally, I remain bullish on additional upside. The company's diverse offerings in ammunition, vehicles, and electronic solutions position it well for future defense budgets and self-sufficiency in Europe.
Defence group Rheinmetall has struck a deal with Germany's armed forces to provide logistical support during troop redeployments both domestically and abroad, it said on Wednesday.
German arms maker Rheinmetall expects to keep growing even faster than earlier thought, its CEO said, given U.S. President Donald Trump administration's calls on Europe to boost defence spending and take responsibility for its own security.
Germany's cartel office approved the establishment of a joint venture between the Duesseldorf-based Rheinmetall and Italy's Leonardo , the regulator said in a statement on Monday.
Rheinmetall stock has shown a 158% return, outperforming the S&P 500's 35%, driven by positive sentiment and increasing earnings estimates. Rheinmetall targets €20 billion in sales by 2027 with significant growth in Vehicle Systems, Weapons and Ammunition, and Electronic Solutions segments. The company sees nearly $100 billion in market opportunities in the US, with substantial contracts and growth potential post 2027.
Rheinmetall's innovation, defense spending surge, and strategic US market entry underpin my Buy rating despite its high valuation and recent 700% share price increase. Rheinmetall's $52 billion order backlog, 36% YoY revenue growth, and 72% operating profit increase highlight its robust financial performance. Strategic acquisitions, including access to the US Department of Defense, enhance Rheinmetall's market expansion and potential for significant contract wins.
Rheinmetall AG CEO Armin Papperger says the pressure Donald Trump is putting on Europe to spend more on defense is good. Trump has said Europe should spend as much as 5% of gross domestic product on the military.
Rheinmetall will take a 51% stake in Rheinmetall Defence Lietuva, which will build a new ammunition factory in Lithuania, as part of a partnership agreement, the German defence company said in response to a Reuters query on Friday.
Deutsche Bank upgraded Rheinmetall to Buy from Hold with a price target of EUR 700, up from EUR 550. The firm sees consensus estimates moving up 15%-20% on the company's new targets with more upside potential ahead for the stock.
The arms maker forecasts $21.2 billion in sales over the next three years amid higher defense spending in western markets.
Rheinmetall aims for 20 billion euros ($21.08 billion) in sales for 2027, boosted by increased defence spending by EU and NATO country leaders in response to the Ukraine war, the German defence group said in a Capital Markets Day presentation.