Following the German defense manufacturer’s release of first-quarter preliminary earnings that exceeded market expectations, Rheinmetall’s stock price increased.
Mid-morning trading in Frankfurt saw shares rise 5.9% to 1,419 euros, with the stock up 131% so far this year.
The business supported its full-year target after Monday’s market close and reported preliminary group sales for the first quarter of 2.305 billion euros ($2.63 billion), a 46% rise. Military-business sales increased by 73% throughout this time.
Operating profit reached 199 million euros, a 49% increase. Operating profit for defense-related businesses increased by almost 96% over this time.
Rheinmetall’s operating profit exceeded market forecasts by 20%, and its revenue was 18% higher than consensus estimates, according to Berenberg analysts George McWhirter and Lavinia Norton.
According to Wall Street analysts at Deutsche Bank, the company’s defense business was moved forward from the second quarter, which contributed significantly to the first-quarter results’ strength. They said that this might indicate slower development from April to June.
Additionally, Rheinmetall supported its full-year projections for an operating margin of approximately 15.5% and a 25% to 30% increase in group revenue.
However, as European countries give more details about their military expenditure plans, experts generally anticipate that the business will improve its full-year projections in the upcoming months.
At its annual summit, which is scheduled for June 24–25 in The Hague, the Netherlands, the 32 member nations of the North Atlantic Treaty Organization are anticipated to pledge to a new defense spending goal.
Rheinmetall remained Jefferies’ top defensive pick.
In a note to investors, Jefferies analysts Chloe Lemarie and Ben Brown stated, “This release confirms our case that Rheinmetall will be among the fastest beneficiaries of the new defense spending environment, even though the shares pulled back slightly amid recent newsflow on ceasefire talks in Ukraine.”
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