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Rheinmetall below EUR 900: delays, cash flow and a detailed DCF
As of 5 November 2026. Reference quote EUR 828.90: 09:46 CET, delayed and intraday. Balance sheet: 30 Sep 2026. Vara consensus: 15 Oct 2026, before warning. DCF uses author scenarios and is not a recommendation.
Rheinmetall fell below EUR 900 following another cut to its annual guidance. Defence demand remains strong, but contract awards, acceptances and customer advances are arriving later than expected. Equity value depends on turning orders into cash on time. Our DCF indicates about EUR 897 per share in the base case, with a very wide range across scenarios.
1. What happened to the share price
We analyse Rheinmetall AG's ordinary share, RHM, ISIN DE0007030009, quoted in EUR. FT/Markit's observation for 5 November 2026, 09:46 CET was EUR 828.90, 17.39% below the previous Xetra close of EUR 1,003.40. The available session low was EUR 818.70. This is an intraday snapshot delayed by at least 15 minutes, rather than a closing or live price. With 46,789,567 issued shares, it implies an equity market value of about EUR 38.78bn, calculated by the author.
FT/Markit · price and timestamp Onvista · Xetra history Rheinmetall · shares, Q3 report, p7
2. The trigger: a second guidance cut in 2026
The 4 November, 17:38 CET announcement pushed the expected Arminius/Boxer contract award, associated advances and revenue into 2027. Artillery ammunition batch acceptances are also delayed, while anticipated 2026 contributions from the Destinus cooperation are lower. The resulting sales mix reduces the margin.
The revenue guide falls 5.4% against the previous midpoint. Revenue multiplied by margin implies an operating result falling from EUR 2.651bn to EUR 2.442bn, or 7.9%. This is our calculation rather than reported EBIT. August's earlier EUR 300m revenue reduction followed the cancellation of the F126 frigate programme. Arminius is currently a delay; F126 was a cancellation. These are different risks.
Rheinmetall · 4 Nov ad hoc Rheinmetall · 6 Aug guidance cut Q3 report · pp22–23
Author's interpretation: a price reaction larger than the annual revenue reduction suggests a higher execution risk premium and greater caution over long-term targets. Delayed payments reduce present value; repeated delays also increase uncertainty about later cash flows. The exact share of the price fall attributable to each driver cannot be established reliably.
3. Rheinmetall's five defence businesses
The Düsseldorf-based group supplies military vehicles, weapons and ammunition, air defence, digital and electronic systems, and naval vessels and services. Products include Boxer, Lynx, Skynex and Skyranger. Civilian Power Systems is classified as discontinued operations, so its revenue is excluded from our defence forecast. Naval Systems, expanded through the NVL acquisition, also brings long-duration shipbuilding contract risk.
Rheinmetall · group profile and structure Rheinmetall · September 2026 presentation
Rebuilding European inventories and defence capabilities creates a long-term opportunity. NATO's 2035 commitment is 5% of GDP, including at least 3.5% for core defence and up to 1.5% for broader security investment. A political spending target is not an order for a particular supplier. Deliveries require budgets, qualified products and production capacity.
NATO · definition of the 5% commitment
4. Earnings are growing; cash remains the challenge
Nine-month revenue was EUR 8.376bn, adjusted operating result EUR 1.339bn, and operating margin 16.0%. Continuing-operations OFCF was negative EUR 1.698bn. Inventory and working capital absorb funding before delivery, alongside factory investment. Negative cash generation during part of a year does not prove permanent unprofitability, but it requires improvement and financing.
The EUR 78.012bn backlog comprises EUR 54.318bn of orders and EUR 23.694bn of frameworks. Frameworks are not unconditional revenue. Q3 Order Intake was EUR 3.311bn, while the separate Rheinmetall Nomination metric was EUR 2.893bn. We do not interchange these measures.
Rheinmetall · 5 Nov results release Q3 report · definitions, pp3 and 14
5. Forecasts: management, analysts and our model
Management's September ambition was approximately EUR 50bn of 2030 revenue, with a margin above 20%. It included acquisitions and excluded potential additional US contract wins. Acquisition-funded growth cannot be valued without the cost of financing it. Our DCF assumes no further acquisitions.
Vara's consensus is dated 15 October 2026, before the warning. It is a historical reference rather than an updated post-warning consensus.
Note: 2026 uses the company's revised revenue guide; later years are author assumptions. Vara showed a 21.2% operating margin in 2030, with 20 revenue estimates ranging from EUR 32.77bn to EUR 47.53bn. Our 2030 sales are about 21% below that earlier consensus.
Vara Research · dated consensus and sample sizes Rheinmetall · 2030 ambitions, presentation p65
According to dpa-AFX's 5 November report, JPMorgan cut its target from EUR 1,350 to EUR 1,150, retaining Neutral; Citi cited EUR 1,374 and Buy, viewing the issue mainly as a delay. These are two broker opinions reported by an agency, not a full consensus or our own targets.
dpa-AFX / MarketScreener · analyst reactions
6. How the DCF works
We estimate cash flow to all capital providers: FCFF = EBIT × (1 − tax) + depreciation − capital expenditure − additional working capital. Forecast EBIT is normalised, before purchase-price-allocation amortisation and excluding equity-accounted earnings. Associates are valued separately. FCFF is not equated with the company's reported OFCF.
The forecast covers 2027–2036, capturing factory expansion and a later slowdown. Base tax is 30%, capex falls from 9% to 4.5% of revenue, and depreciation excluding PPA rises from 2.7% to 3.3%. Capex includes the economic cost of new leased assets. Working capital absorbs 10% of incremental sales after typical customer financing, a simplified author assumption that is particularly sensitive to advance payments.
PPA amortisation is not added back again to earnings that already exclude it. We assume no further acquisitions, dilution or buybacks. Public information does not provide a complete programme-by-programme schedule of volumes, prices and acceptances, so the forecast is top-down.
DCF · formula-based XLSX model Accounting basis · Q3 report, pp14–15 and 30
7. Detailed base forecast
All figures below are EUR million and are author forecasts. NOPAT is normalised operating profit after tax; ΔNWC is incremental working capital; PV is present value at 5 November 2026. Capex and ΔNWC are displayed as positive amounts deducted from cash flow.
Note: EBIT and D&A use the definitions in the previous section. For example, 2027: 3,325 × 70% + 472.5 − 1,575 − 430 = EUR 795m FCFF. Revenue growth fades, while the margin falls from 20.5% in 2030 to 19.0% in 2036. The boom is not extrapolated indefinitely.
8. Cost of capital and terminal value
Base WACC is 9%. The illustrative construction uses a 3% risk-free rate, beta of 1.3 and 5% equity risk premium, giving a 9.5% cost of equity. With 90% equity, 10% debt, 4.5% cost of debt and 30% tax, WACC is 8.865%, conservatively rounded to 9%. These are author assumptions rather than measurements of today's bond yields or beta. The sensitivity table shows alternative discount rates.
After 2036 we assume nominal growth g = 2.5% and a 12% return on new capital, ROIC. Required reinvestment is g/ROIC, or 20.83% of after-tax operating profit. Thus FCFF 2037 = 6,144.6 × 1.025 × (1 − 2.5%/12%) = EUR 4,986.1m. It is below 2036 FCFF because steady-state growth requires a separate normalisation of reinvestment.
Terminal value at the end of 2036 is FCFF 2037 / (WACC − g), or EUR 76.709bn. Its present value is EUR 31.977bn, 61.1% of operating enterprise value. Reliance on the distant future limits precision. We use year-end discounting: the 2027 exponent is 1 + 56/365 and the 2036 exponent is 10 + 56/365.
9. From operating value to one share
Net debt includes leases and already deducts cash, which is not added twice. The share count reflects the convertible bond conversion completed in July. Balance sheet inputs are from 30 September. Associates use book value as a proxy. The EUR 350m civilian disposal price is provisional and subject to closing and adjustments; undisclosed transaction costs have not been deducted.
The least precise bridge item is minority interests: we assume 15% of operating EV rather than deducting book equity alone. This is an author proxy, not a disclosed market valuation. A 10% assumption produces EUR 953 per share, and 20% produces EUR 841. A current profit share does not establish a share of business value.
Q3 report · balance sheet, conversion and disposal, pp7–8 and 25 Model · full formulas
10. Scenarios and sensitivity
The bear case combines slower acceptances, lower margins and greater cash absorption. The bull case requires rapid capacity utilisation and durable profitability. No arbitrary scenario probabilities are assigned. These are present values, not forecasts of a share price on a particular future date.
The table shows EUR per share, holding base operating forecasts and 12% ROIC constant. Changing g also changes reinvestment needs; growth is not free.
At 2.5% terminal growth, increasing WACC from 9% to 10% lowers value from approximately EUR 897 to EUR 754. The base case's 8.2% premium is small relative to this uncertainty. Holding other base assumptions fixed, EUR 828.90 corresponds to WACC of approximately 9.44%: a reverse-model solution rather than an observed market cost of capital. The model demonstrates sensitivity to growth execution and the discount rate.
11. What would change the assessment
Rheinmetall · events calendar Q3 report · risks and outlook
Author's assessment: the selloff calls for reassessing cash flows and delivery schedules. Base DCF is near EUR 900, but does not establish a large margin of safety at the EUR 828.90 snapshot. More reliable conversion of orders into profitable deliveries and cash would provide the strongest support for higher value.
12. Limitations and interest disclosure
The model assigns zero FCFF to the period from 5 November to the end of 2026 and does not roll the September balance sheet forward to the valuation date. This is material given seasonal advances and cash flows. Each additional EUR 1bn of net debt reduces value by approximately EUR 21.37 per share, all else equal. Market valuations of minorities and associates and a fully updated post-warning consensus are also unavailable. We did not obtain the Q3 2026 call transcript and attribute no comments to that call.
Author: Gallus Herodicus. The author owns Rheinmetall shares. Analysis date: 5 November 2026. The quote has the timestamp stated above. Author assumptions, calculations and judgments are distinguished from reported figures, management targets and historical consensus. The opening image is an AI-generated conceptual illustration; charts use the cited data and model. This educational article is not an investment recommendation.
Download the detailed DCF · XLSX
Posts reflect the author’s personal views as of publication. They are not investment recommendations.