Germany's biggest defense company just had its best year ever. Wall Street shrugged.

What the Numbers Actually Said

Rheinmetall reported FY2025 sales of nearly €10 billion — up 30% from the year before. Operating profit jumped 33% to a record €1.84 billion, with an 18.5% margin.

The order backlog hit €63.8 billion, a 36% increase. The company expects that number to more than double to €135 billion by year-end 2026.

For 2026, Rheinmetall is guiding for €14 to €14.5 billion in sales — growth of up to 45%.

Why the Stock Dropped Anyway

The miss was narrow but real. Earnings before interest and taxes came in at €1.68 billion, slightly below analyst estimates of €1.75 billion, according to CNBC.

Shares fell 6.9% to €1,634 — a reminder that at a P/E ratio above 80, any stumble gets punished.

The stock had already run up roughly 540% over three years. Coming into earnings, it was up just 3.4% on the year, a sign investors had been cooling on the valuation even before today.

What's Fueling the Growth Outlook

Two wars are essentially Rheinmetall's sales pipeline right now. European governments are spending heavily on missiles, ammunition, and air defense — and the company says in its earnings presentation that "higher spend for missile restocking and air defence is inevitable."

The company also just closed its acquisition of naval shipbuilder NVL on February 27, adding a new segment and up to €12 billion in potential German Navy contracts.

It's also selling off its automotive division to go all-in on defense — a bet that geopolitical instability isn't going anywhere soon.

With €80 billion in potential new orders expected this year, the backlog story is far from over. The question is whether the stock price already knew that.