Rheinmetall (RHMG) Stock Falls After Earnings Miss — But €73B Backlog Tells a Different Story

TLDR

• Rheinmetall stock fell more than 2% after Q1 sales and operating profit came in below analyst expectations
• Q1 sales hit €1.94 billion, up 8% year-over-year, but missed the €2.27 billion consensus
• Operating profit rose 17% to €224 million, still short of the €262 million forecast
• Order backlog grew 31% to a record €73 billion, with Naval Systems included for the first time
• Rheinmetall confirmed 2026 guidance of €14–€14.5 billion in sales and ~19% operating margin

Rheinmetall posted first-quarter sales of €1.94 billion, up 8% from €1.80 billion a year earlier. That missed the analyst consensus of €2.27 billion by a wide margin.

Operating profit came in at €224 million, a 17% year-over-year increase, but fell short of the €262 million the market expected. The operating margin ticked up to 11.6% from 10.6%.

Basic earnings per share from continuing operations rose to €2.18 from €1.78, but missed the €2.70 consensus estimate.

Rheinmetall AG, RHM.DE

Operating free cash flow was negative €285 million for the quarter, a sharp swing from positive €243 million a year earlier and well below the positive €181 million analysts had pencilled in.

The stock dropped more than 2% on Thursday following the results. The miss across multiple key metrics was hard to ignore, even with some underlying growth.

Record Backlog Offers Some Comfort

One standout from the report was the order backlog, which jumped 31% to €73 billion from €56 billion a year earlier. Naval Systems was included for the first time, bringing an order backlog of €5.50 billion.

Order intake, however, fell 55% to €4.90 billion compared with €10.70 billion in the prior-year quarter. Rheinmetall said the year-ago period was boosted by several multi-billion euro deals.

Goldman Sachs analysts noted that the market would likely focus on the demand backdrop in Germany and expectations around order timing.

Cruise Missiles and New Partnerships

Beyond the numbers, Rheinmetall made headlines for its push into cruise missile production. The company said it plans to start producing advanced cruise missiles with Dutch firm Destinus as early as Q4 2026 or early 2027 through a newly formed joint venture, Rheinmetall Destinus Strike Systems, in which Rheinmetall holds a 51% stake.

The Destinus Ruta Block 2 missile completed a flight test in late April. It has a range of over 700 kilometers and is designed to hit critical infrastructure.

CEO Armin Papperger said talks with Lockheed Martin about producing rockets and missiles in Germany are moving slower than hoped, citing disagreements over cost-sharing. He said Rheinmetall is also exploring missile partnerships with Raytheon.

Papperger flagged strong Q2 expectations, pointing to large-volume orders in naval and vehicles, plus full production at the Murcia ammunition plant in Spain following last year’s explosion.

Rheinmetall also submitted a nonbinding bid for German Naval Yards Kiel and is looking at acquiring part of the Mangalia shipyard in Romania as part of its naval expansion.

The company said it is in talks with several Middle Eastern countries to deliver up to 10 air defense systems this year, following regional tensions stemming from the U.S.-Israel conflict with Iran.

Full-year 2026 guidance remains unchanged: sales of €14 billion to €14.5 billion and an operating margin of around 19%.

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