Rheinmetall's Record Profits Don't Shield Falling Share Price

Rheinmetall AG, a prominent player in the defense sector, recently reported impressive financial results. The company achieved a 29% revenue increase to EUR 9.9 billion in 2025 and robust earnings growth of about 32%. Additionally, its order backlog exceeds EUR 80 billion. However, despite these achievements, its share price has unexpectedly declined.

The decline is partly attributed to the cancellation of a major project. However, Warren Wise's analysis in the “Warrens Watchlist” podcast suggests deeper issues. Although Rheinmetall's economic moat is strong, key questions regarding risk transparency and financial disclosures remain unanswered. This lack of transparency influences its valuation, despite an impressive operating margin and rise in return on capital.