Rheinmetall has seen its share prices retreat after experiencing a significant upward trend, attributing this movement to the sustained demand for defense equipment. This fluctuation is noteworthy for investors, particularly those focused on long-term order visibility. Recently, the company’s share price recorded a decline of 9.9% over the last month, which many analysts suggest could be a temporary correction rather than a fundamental shift in market sentiment. This comes after an impressive year-to-date increase of approximately 166%, highlighting Rheinmetall’s strong performance and favorable long-term investor returns.
The defense sector’s momentum, fueled by rising budgets and major contract acquisitions, raises questions about whether Rheinmetall’s current valuation reflects its true potential or if the market has already accounted for anticipated growth in defense spending. Analysts from EUinvestor have posited that the company’s fair value by 2030 could significantly exceed its recent closing price of €1,610. They suggest that if projections hold, this could imply substantial upside potential.
Looking ahead, Rheinmetall’s CEO, Armin Papperger, has forecasted that orders could swell by as much as 450% by 2030. While the company’s share price on April 17, 2025, was at €1,464, this projection hints at a target price reaching as high as €8,052 if growth expectations materialize. This speculation occurs against a backdrop of anticipated increases in NATO spending in Europe, which is projected to rise to 3.5% of GDP with additional spending on transport and IT infrastructure.
However, there’s a divergence in reporting on these budget increases, with some European media suggesting that the 3.5% target may be a gradual goal to be achieved by 2030-2035—not an immediate mandate.
Despite its optimistic outlook, investors are also reminded of potential risks that could derail this growth narrative, including a significant reduction in tensions surrounding Ukraine or the introduction of protectionist measures, such as tariffs on European industry by the U.S.
Currently, analysts believe there is about a 37% upside to a price target of around €2,204 for Rheinmetall. However, the company’s valuation poses challenges, with Rheinmetall trading at approximately 85.7 times its earnings—substantially higher than the European aerospace and defense industry average of 30.2 times, and its own historical average of 51.5 times. This leaves the stock vulnerable should growth decline or economic conditions shift.
Investors are encouraged to consider multiple facets of Rheinmetall’s performance, including its growth prospects and overall valuation metrics. While some analysts remain optimistic, caution is advised due to the high earnings multiple reflecting the current price, which leaves limited room for error.
For those looking to conduct a more in-depth examination, resources such as the Simply Wall Street Screener could provide additional insights into potential growth, value, and income opportunities associated with Rheinmetall. The analysis emphasizes the importance of examining historical data and analyst forecasts, although it does not constitute personalized financial advice.
