Rheinmetall shares still firmer: quarterly sales below expectations – HENSOLDT before balance sheet

Sales and operating profit fell short of expectations. However, the margin met market forecasts. The DAX group confirmed its outlook for the full year. He expects growth to accelerate significantly in the second quarter, thanks to deliveries in the weapon and ammunition segment.

Sales climbed by 7.7 percent to 1.94 billion euros in the first three months. Analysts had expected a consensus of 2.3 billion. However, sales increased by 73 percent in the same period last year, which was due, among other things, to bring-forward effects from the second quarter.

At 224 million euros, operating profit was 33 million euros higher than the previous year. The expectation here was 262 million euros. This resulted in an operating margin of 11.6 percent after 10.5 percent in the previous year.

The order backlog climbed by 31 percent to around 73 billion euros.

For the current year, Rheinmetall continues to forecast sales growth of 40 to 45 percent to 14.0 billion to 14.5 billion euros and an operating margin of 19 percent after 18.5 percent in the previous year.

Rheinmetall will present the full figures for the first quarter on Thursday.

Rheinmetall weak – key data disappoint, but goals remain in place

Rheinmetall shares were the most active stock on the Tradegate trading platform on Tuesday morning before the market. After disappointing key data for the first quarter the evening before, the defense company’s shares slipped more than 2 percent below their XETRA closing to around 1,357 euros. This means that the price recovery at the start of the week would be a thing of the past. But in main trading, the paper appeared robust via XETRA and ultimately gained 3.40 percent to 1,435.40 euros. They thus continued their recent recovery and temporarily conquered the top of the DAX.

Experts see the first quarter as a disappointment, but they expect the Düsseldorf-based company to be able to make up for the damage quickly. Rheinmetall does not have a fundamental problem, only timing effects are disappointing. Afonso Osorio from Barclays nevertheless expects a negative price reaction, even if the weak start to the year will probably be reversed in the second quarter.

After a strong start and a weak second quarter of 2025, things are likely to be exactly the opposite this year, believes David Perry from the US bank JPMorgan. Investors are now far more critical than between 2022 and 2025 when it comes to the implementation of ambitions. But the explanations for the weak start to the year seemed understandable. In addition, despite a surprisingly significant increase in German defense spending for 2027, shares have been weak since the beginning of the year, which is why he sees price declines as an opportunity to gain entry.

Bernstein expert Adrien Rabier is meanwhile optimistic about further price developments. The path to the target sales growth of 40 to 45 percent in the defense business in 2026 is likely to remain bumpy. But he still sees Rheinmetall as his preferred European industry stock and as the top dog in the most important market, Germany.

Yan Derocles from Oddo BHF was somewhat more reserved. The first quarter is usually the company’s weakest seasonally. However, the cautious start to the year increases the risks for the annual targets, although Rheinmetall expects a significant acceleration in business in the second quarter. If this becomes a reality, the stock should rise in the coming months. For valuation reasons, Derocles prefers the securities of industry colleagues RENK and Thales.

Jefferies leaves Rheinmetall at ‘Buy’ – target 2220 euros

The analysis house Jefferies has left Rheinmetall’s rating at “Buy” with a price target of 2,220 euros. Sales in the first quarter were poor, wrote Chloe Lemarie on Monday evening after the defense company’s key data. But the comments regarding the first half of the year are reassuring.

HENSOLDT in focus before quarterly figures

In addition to Rheinmetall, HENSOLDT is also in the focus of investors. The arms company will present its figures for the most recent quarter tomorrow.

There are signs of a significant upturn in business at HENSOLDT in the past quarter. Two analysts are forecasting an average turnover of 489.0 million euros, which corresponds to a strong increase of 23.80 percent compared to the previous year’s value (395.0 million euros). At the same time, a significant improvement in earnings is expected: While a loss of EUR 0.260 per share was recorded in the same period last year, an analyst is only expecting a small loss of EUR 0.095 per share for the current reporting quarter.

The HENSOLDT share was correspondingly strong: in XETRA trading, the stock rose by 2.93 percent to 80.78 euros.

In addition, the armaments players RENK and TKMS rose in the slipstream by 1.58 percent to 55.26 euros and 1.74 percent to 84.80 euros.

DOW JONES / dpa-AFX / dpa-AFX Broker

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