"The world is changing rapidly, and Rheinmetall is well prepared."
That line from CEO Armin Papperger sounds almost poetic, doesn't it? Like Heisenberg saying "I am the one who knocks" — except instead of meth, the product here is tanks, ammunition, and rocket engines. And the customer? Well, the customer is basically every Western government that just woke up from its pacifist nap and is now desperate to arm itself to the teeth.
The numbers: pretty, but not pretty enough
Rheinmetall reported revenue of €9.94 billion for fiscal year 2025 — a 29% increase over the prior year. Operating profit (EBIT) of €1.68 billion. Sounds out of this world, right?
Yeah. But the market wanted more.
LSEG estimates had pointed to €10.53 billion in revenue and €1.75 billion in EBIT. Rheinmetall came in below on both. Shares dropped 5.2% early Wednesday morning.
And here's the delicious irony of war capitalism: the company grew nearly 30% in a single year, is sitting on top of a record backlog of €63.8 billion (up 36%), and the market still slapped it across the face. Expectations are a real bitch.
The 2026 guidance: "Hold my Panzerfaust"
Now here's the juicy part.
Rheinmetall projects sales between €14 and €14.5 billion in 2026. That represents 40% to 45% growth over 2025. Expected operating margin of 19%, up from 18.5% the prior year.
And perhaps the most obscene number: the backlog is expected to more than double, reaching €135 billion.
One hundred and thirty-five billion.
For context: the company's market cap already makes it the seventh largest in Germany. And Jefferies analysts called this guidance "realistic but conservative." Translation from Wall Street-speak: "we think it could be even better than that, but nobody wants to sound crazy."
The elephant in the room: the war in Iran
This is where things get real.
Rheinmetall stated, point-blank, that it's in a "privileged position to help the U.S. replenish its missile stockpiles" used in the war in Iran. Specifically, by supplying solid propellant rocket motors — the heart of any modern missile.
In the investor presentation, the company hammered it home: "Higher spending on missile replenishment and air defense is inevitable."
Inevitable.
That's not a forecast. It's a statement of fact from the people who make the bullets. It's like the bakery owner telling you there'll be a line tomorrow — he already knows how many loaves are in the oven.
With the wars in Ukraine and Iran running simultaneously, NATO governments — which recently agreed to a military spending target of 5% of GDP — are basically writing blank checks to the defense industry.
What really matters here
Look, I know there's a moral discomfort in analyzing arms manufacturers as investments. And there should be. We're not talking about a software company or a gourmet coffee brand. We're talking about an industry that literally profits from destruction.
But if you're an investor — and not a preacher — you need to look at the facts with a surgeon's cold detachment.
Fact 1: Rheinmetall shares have surged more than 540% in recent years.
Fact 2: The backlog is exploding at a pace that very few companies on the planet can replicate.
Fact 3: Demand isn't cyclical in the traditional sense. As long as there's war — and damn, just look at the world — there's demand.
Morningstar analyst Loredana Muharremi pointed out that delayed programs should convert into contracts as European defense budgets are approved, especially in Germany. In other words, what Rheinmetall didn't deliver in 2025, it'll deliver with interest in 2026.
Barclays analysts had already said back in February that the prior stock drop after the pre-guidance was an "overreaction," and that "from a structural standpoint, nothing has changed: backlog growth in 2026 will be material."
The question that remains
Rheinmetall missed estimates and fell 5%. But it's projecting 45% growth and a doubling of the backlog.
Are you going to let short-term noise scare you off — or are you going to pay attention to the arsenal this company is building?
Because Papperger might sound like a used car salesman when he says "the world is changing." But the €135 billion backlog doesn't lie. Numbers never lie. Narratives do — and boy, do they ever.
