Is Rheinmetall Still Attractive After 229% Surge and European Defense Expansion in 2025?

If you have been tracking Rheinmetall lately, you are probably feeling both curious and a bit exhilarated. For anyone considering whether to buy, hold, or sell, it is hard to ignore what has been happening with this stock. The numbers are eye-catching: over just the past month, Rheinmetall shares jumped 13.6%, and when you zoom out, the gains are even more impressive. Year-to-date, the stock has surged 228.8%, and in the past five years, it is up an astonishing 2688.0%.

A big part of this momentum ties back to shifting global dynamics around defense and security. Investors are increasingly viewing Rheinmetall as a key player poised to benefit from rising geopolitical tensions and increased defense spending across Europe. Along the way, changing risk perceptions have brought more attention and sometimes higher expectations for the company’s future growth.

But is Rheinmetall still a good value at these elevated levels? On a purely quantitative basis, the company scores a 2 out of 6 on our undervaluation checklist, signaling it passes only two of six key valuation tests. This mixed picture can make it tricky to judge whether you are joining in on long-term potential or arriving after the best gains have already played out.

In the next sections, we will break down how different valuation methods stack up for Rheinmetall. By the end, I will share an approach that just might give you the clearest answer yet on whether this stock deserves a place in your portfolio.

Rheinmetall scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Rheinmetall Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's fair value by projecting its future cash flows and discounting them to today's terms. This method gives investors a sense of what the business might truly be worth, rather than just its current market price.

For Rheinmetall, the latest reported Free Cash Flow stands at €509.7 Million. Analysts project significant growth over the coming years, with Free Cash Flow expected to reach €3.99 Billion by 2029. It is important to note that only five years of projections come directly from analysts, with Simply Wall St extrapolating the remainder to round out the 10-year forecast. This anticipated growth illustrates a sharp upward trend in Rheinmetall's ability to generate cash.

Based on this DCF analysis, Rheinmetall’s estimated intrinsic (fair) value is €2,891.49 per share. With the current share price trading at a 31.3% discount to this value, the model suggests the stock is notably undervalued right now.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Rheinmetall.

Our Discounted Cash Flow (DCF) analysis suggests Rheinmetall is undervalued by 31.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Rheinmetall Price vs Earnings (PE)

For profitable companies such as Rheinmetall, the Price-to-Earnings (PE) ratio is a widely accepted benchmark for valuing a stock. This ratio helps investors gauge how much they are paying for each euro of the company's earnings, making it especially useful when comparing mature businesses with consistent profit streams.

However, growth prospects and risk profile play a major role in determining what constitutes a “normal” or “fair” PE ratio. Companies expected to deliver rapidly growing or more stable earnings often command higher PE multiples, while those facing uncertainties or limited growth typically trade at lower ratios.

• Rheinmetall’s current PE ratio: 107.8x
• Peer average PE ratio: 80.9x
• Aerospace & Defense industry average: 47.1x

Simply Wall St’s proprietary “Fair Ratio” provides deeper context by calculating a benchmark PE ratio (54.2x) tailored to Rheinmetall’s specific blend of earnings growth, profit margins, business risks, industry, and market capitalization. In contrast to simple comparisons to peers or industry averages, the Fair Ratio reflects a more nuanced, precise baseline for what investors should expect to pay given all relevant factors.

Comparing Rheinmetall’s actual PE multiple (107.8x) to its Fair Ratio (54.2x), the stock appears substantially more expensive than justified by its fundamentals and risk profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Rheinmetall Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a dynamic, story-driven approach available on Simply Wall St’s Community page that empowers you to combine your view of Rheinmetall’s story with a clear, quantified fair value.

In simple terms, a Narrative is a way for you as an investor to outline your personal perspective on Rheinmetall, whether you believe in its future or remain cautious, and connect that story directly with your forecasts for revenue, profit margins, and growth.

Each Narrative ties together your assumptions and key events into a financial forecast, producing an evidence-based fair value that you can easily compare to today’s market price. This makes decisions about buying, holding, or selling much clearer.

Narratives are straightforward to create and update, and whenever new information emerges, such as fresh earnings or breaking news, your Narrative’s fair value adjusts automatically, ensuring your decisions always reflect the latest facts.

For instance, one investor might project Rheinmetall surging toward €8,052 per share based on a 450% order book growth by 2030, while another sees a fair value closer to €2,100, expecting only moderate expansion and heightened risks. Narratives let you transparently see and test both scenarios for yourself.

Do you think there's more to the story for Rheinmetall? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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