Rheinmetall is Europe’s second-largest defense conglomerate with a market value of 23.3 billion euros. The company has experienced tremendous growth over the past three years, nearly doubling its revenue compared to 2021. During the same period, earnings per share have tripled.
Based in Düsseldorf, Rheinmetall AG is a key player in both the defense and automotive industries in Europe, offering a wide range of military products such as armored vehicles, ammunition, and advanced weapon systems.
Rheinmetall produces various types of weapons, including the cannon for the Leopard 2 tank, the Boxer transport vehicle, various artillery pieces and systems, machine guns and automatic weapons, as well as air defense systems.
This year, revenue is expected to increase by almost 38 percent, with a further increase of over 20 percent projected for next year.
Profit is expected to rise by 66 percent this year, from 12 euros to 20 euros. By 2025, earnings per share are forecasted to reach 29 euros.
| 2023 | 2024 | 2025 | 2026 | |
| Revenue MEUR | 7,176 | 9,945 | 12,22 | 14,973 |
| Ebitda MEUR | 1,226 | 1,846 | 2,359 | 3,053 |
| Ebit MEUR | 897 | 1,454 | 1,927 | 2,574 |
| Profit before tax MEUR | 815 | 1,282 | 1,778 | 2,407 |
| Net profit MEUR | 535 | 878.5 | 1,257 | 1,718 |
| Operating margin, % | 12.5% | 14.62% | 15.77% | 17.19% |
| Earnings per share EUR | 12.07 | 20.18 | 28.89 | 39.51 |
| Dividend EUR | 5.7 | 7.704 | 10.92 | 14.45 |
| P/E | 23.8x | 26.5x | 18.5x | 13.5x |
| Source: S&P Global Markets Intelligence | ||||
Rheinmetall AG was founded in 1889 by Heinrich Ehrhardt in Düsseldorf, initially focusing on the production of weapons and ammunition for the German army. Over the years, the company evolved to specialize in cannons and other artillery weapons. During World War I, Rheinmetall became a significant supplier to the German military, becoming a central part of Germany’s armaments industry.
After World War II and Germany’s demilitarization, the company was banned from producing weapons for several years. During this time, Rheinmetall shifted its focus to civilian products such as machine tools and vehicle components.
In the 1950s, when Germany was allowed to resume weapon production after joining NATO, Rheinmetall returned to its military focus. The company quickly became a key supplier of weapons, ammunition, and military equipment to the Bundeswehr.
The results for the second quarter were very strong, with the weapons and ammunition division accounting for the majority of the increased sales. Sales in this segment increased by 108 percent compared to the previous year, driven by large deliveries to the German army and the Ukrainian army.
The recent acquisition of the Spanish ammunition manufacturer Expal also had a positive impact.
The order book amounts to 48.6 billion euros. The company also confirmed that the sales target for 2024 is at least 10 billion euros with an operating margin of 14–15 percent. Rheinmetall stated that sales growth is expected to be around two billion per year over the next two years.
So far this year, Rheinmetall’s stock has risen by 85 percent. Over the past three years, the increase amounts to an incredible 546 percent.
The company is trading at a P/E ratio of 18 based on the 2025 estimate. The EV/EBIT ratio is at 12. At the same time, continued strong sales growth is projected.
Twelve out of fifteen analysts recommend buying the stock. The average target price is 610 euros.
Rheinmetall remains well-positioned to benefit from expanding European defense budgets. These investments are long-term in nature, with a growing demand for NATO-standard 155 mm artillery shells in the coming years due to the war in Ukraine and the need for European countries to build up their stockpiles of artillery ammunition.
Analysis:
Rheinmetall, Europe’s leading defense manufacturer, has experienced significant growth in recent years, with impressive financial performance and a strong outlook for the future. With a diverse portfolio of military products and a solid order book, the company is poised for continued success. Investors may consider Rheinmetall as a potential opportunity for long-term growth and financial gains, especially in the defense industry sector. It is crucial to monitor the company’s performance and market trends to make informed investment decisions.