German defense company Rheinmetall AG (RHM) has seen a dramatic stock market rally over the past two years amid intense discussions about German and European rearmament. On October 3, 2025, Rheinmetall hit an all-time high. The key question for investors remains: Is this still a good time to buy, especially as the US Congress signals a moderation in the aggressive foreign policies promoted by the Trump administration after the capture of President Maduro?

Rheinmetall (RHM) fundamental analysis

Rheinmetall holds a strategic position within the new European security architecture. The Bundestag has approved massive modernization contracts, which have ensured constant annual growth since 2020.

Although analysts remain bullish on the stock’s prospects, recent financial indicators call for caution. The result for the last 12 months (TTM), calculated as of September 30, 2025, indicates a significant compression of the profit margin from 35.88% to 24.61% compared to the previous period.

Cash flow also deteriorated dramatically to -30.78% in 2025 (compared to 131.49% in 2024), reflecting both the cyclicality of the sector and the massive investments in production capacities.

Expansion into Eastern Europe and a partnership with Romania

The prospects for organic and inorganic growth remain solid. On November 3, 2025, the Prime Minister of Romania, Ilie Bolojan, met with Armin Papperger, CEO of Rheinmetall. It was decided that Romania would benefit from SAFE funds to develop propellant powder production capacities in Victoria, through the Rheinmetall Victoria joint venture (partnership between Pirochim Victoria/Romarm and the German company).

This move strengthens Rheinmetall’s strategic presence on NATO’s eastern flank and comes after the German group announced a $1.2 billion investment in Bulgaria (in partnership with VMZ) for a gunpowder and shell factory, where it will own 51% of the share capital.

The Contract Portfolio and the “Trump Effect”

Rheinmetall has secured an impressive “backlog”:

Germany: Framework contracts for 155mm ammunition (up to €8.5 billion) and 120mm (€4 billion), plus infantry digitalization (Gladiator system – €3 billion).

International: Skyranger systems for the Netherlands, Skynex for Italy, and LLM-Vario Ray units for the German army’s new assault rifle.

Ukraine: Constant deliveries of ammunition and vehicles, plus the construction of local factories.

However, political uncertainty in the US is weighing on the sector. Donald Trump’s rhetoric about reduced US involvement in NATO is speeding up European armament. But a possible ceasefire imposed in Ukraine could significantly dampen investor enthusiasm and pressure share prices.

Rheinmetall Technical Analysis

Is it time for accumulation on Rheinmetall?

Although fundamentally the company benefits from a solid portfolio of long-term contracts, from a technical point of view, RHM stock appears to have entered a correction phase after reaching its all-time high. The price is down only 5.1% from its all-time high and has recovered spectacularly from the low of EUR 1,410, now trading at EUR 1,905.

How do we proceed with the Rheinmetall stock now?

The price has experienced a steep decline since October 3, from a high of EUR 2,008, which constitutes a stand-alone Elliott wave (Wave A), colored green, and is particularly impulsive. We are now witnessing a counter-reaction, and it is implausible that the decline to EUR 1,410 represented the entire correction.

Rheinmetall’s strategic plan for action

Although we sense a possible Flat (A-B-C) pattern, wave B can still climb to EUR 2,008 without invalidating the scenario; however, it would be optimal not to exceed the EUR 2,008 level to avoid complicating the structure and to develop a totally new strategy.

A climb to EUR 1,940 remains possible, but the risk of failure increases progressively over time, followed by a potential sudden decline. Prudently, we will not initiate any position until the price confirms that we are, in fact, in wave B of this structure.

The confirmation of wave B of the Flat pattern on Rheinmetall

Only after the price drops and reaches the level of 1,661 EUR again, will we consider validating this scenario and opening a short position or waiting for the correction to complete for long entry.

According to Refined Elliott wave theory, with the critical threshold of 1,661 EUR broken downwards, the technical price target for wave C is 1,410 EUR, offering an attractive risk/reward ratio for tactical trading.

Morraevo vs. Wall Street Consensus Comparison for Rheinmetall (January 2026)

Note: Morraevo’s analysis uses the Refined Elliott Wave Theory and identifies technical structures that suggest continuation of downtrends, in significant contradiction to the optimism of Wall Street analysts.

The divergence is the percentage difference between the average analyst target and Morraevo’s target, highlighting the degree of disagreement in forecasts.

Conclusion about Rheinmetall and the defense sector in general

Similar to the AI ​​sector, the defense market is moving from the “enthusiasm on promises” phase to the “confirmation by results” phase. Investors expect record orders to materialize into tangible net profits by 2027-2028. In the current geopolitical context – marked by uncertainty regarding the continuation of the Trump administration’s aggressive strategy and the limitations imposed by the US Congress following recent diplomatic incidents – Rheinmetall remains a company to watch carefully, but one that requires rigorous entry discipline and risk management.

For now, caution and waiting for technical confirmations seem to be the optimal strategy. Investors should closely monitor the critical level of EUR 1,661 to validate the correction scenario or a sustained breach of the EUR 1,940 threshold, which would invalidate the current bearish pattern and could pave the way for new historical highs.