The numbers tell a story of remarkable resilience. Rheinmetall’s order book has swollen to a record €80.5 billion, second-quarter revenue jumped 69.8 percent to €3.289 billion, and operating profit more than doubled to €562 million. Yet the Düsseldorf-based defence group finds itself explaining why its 2026 revenue guidance now sits €300 million lower than previously promised — and why investors are only cautiously returning to the stock.
The culprit is a single, high-profile casualty: the F126 frigate programme. Germany’s defence ministry pulled the plug on the €12.8 billion project in early July, having already spent €2.3 billion, and pivoted instead to eight smaller MEKO A-200 frigates from rival ThyssenKrupp Marine Systems. Rheinmetall, which had been slated as prime contractor, responded by trimming its 2026 sales forecast to a range of €13.7 billion to €14.2 billion. The company has held firm on its operating margin guidance of roughly 19 percent, but the backlog target for 2026 has also been revised downward from an earlier ambition of more than €100 billion.
What makes the setback easier to digest is the sheer volume of business flowing in the other direction. The European procurement agency OCCAR on Monday cleared a call-off for 69 additional Boxer wheeled armoured vehicles — 35 for the German Bundeswehr and 34 for the Dutch army — under a programme run jointly with KNDS. That follows a late-July order from the Bundeswehr for 56 heavy tractor units of the “Elefant 2” type built on the HX81 platform, worth roughly €60.5 million gross, with deliveries scheduled across this year and next. British armed forces also placed an order in late July for weapon systems for the RCH 155 wheeled howitzer, valued in the low triple-digit millions of euros.
The second quarter alone brought in new nominations worth €11.371 billion, including a Bundeswehr contract for loitering munitions and a SAFE package with Romania. July added a laser-weapon agreement worth up to €462 million, a joint project with MBDA Deutschland aimed at drone defence on frigates, plus a €100 million order to digitalise the vehicle fleet under the D-LBO programme, backed by framework agreements totalling around €1.2 billion.
Chief executive Armin Papperger is also pointing to what he calls the “Arminius project” — a potential order for up to 3,000 Boxer vehicles for the Bundeswehr — as entering its final decision phase. Negotiations are slated for August, with a contract conclusion expected in September and a final decision pencilled in for the first or second week of December. In parallel, Rheinmetall is working with Lockheed Martin on producing ATACMS missiles at its Unterlüß facility to help replenish US arsenals.
The strategic response to the lost frigate contract extends across the Atlantic. Rheinmetall is now bidding for the GMF140 frigate programme with the US Navy, a move designed to compensate for the German setback and broaden the company’s naval footprint internationally.
Should investors sell immediately? Or is it worth buying Rheinmetall?
On the trading floor, the shares have been clawing back ground. Wednesday saw the stock close at €1,175.00, up 2.9 percent on the day, helped by stabilising expectations around second-half cash flow. The 30-day gain stands at 21 percent, though the year-to-date picture remains deeply negative at minus 24 percent. The stock still sits 41 percent below its 52-week high of €2,007.00 reached in early October.
Analysts remain split on the investment case. mwb research cut its rating from Hold to Sell on 6 August, lowering its price target from €1,150 to €1,050. Other houses have taken a more constructive view of the operational performance, seeing buying potential even after trimming their own targets.
The financial picture is complicated by a negative free cash flow of €1.6 billion in the first half, driven by substantial inventory build-ups for upcoming deliveries and delayed payment receipts. Management frames this as temporary, with the cash position expected to reverse as deliveries progress.
There is also a human dimension gaining prominence. Papperger, according to dpa, has been placed under personal protection this week comparable to that afforded to the German chancellor, following suspected Russian assassination plots. His own response was characteristically blunt: “Kneifen gilt nicht” — “Quitting is not an option.” The security concerns follow the discovery of an explosive-laden drone at Leipzig airport, which prompted Papperger to call for significantly greater German investment in drone defence.
For now, the operational momentum is intact, and the fresh Boxer, Elefant and RCH 155 orders add further revenue visibility for the years ahead. The question investors are weighing is whether the F126 loss is a one-off stumble or a signal of something more structural — and whether the record backlog can continue to absorb such shocks without derailing the growth story.
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