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    Rheinmetall (XTRA:RHM) Could Be 30% Undervalued As Goldman Backs Growth

    Simply Wall St·08/05/2026 21:40:51
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    Goldman Sachs triggered fresh attention on Rheinmetall (XTRA:RHM) after releasing a highly positive outlook tied to strong second quarter results and revenue growth, and highlighting the company as significantly undervalued.

    See our latest analysis for Rheinmetall.

    Rheinmetall’s recent strength, including a 7.01% 1 month share price return and 4.84% 7 day share price return, comes after a year to date share price decline of 24.52%. The 5 year total shareholder return of roughly 15x still reflects a very strong longer term journey.

    If Goldman’s call has you thinking more broadly about defense and infrastructure themes, this is also a good moment to see what else is moving in related areas such as 36 power grid technology and infrastructure stocks

    Bulls see Rheinmetall’s recent pullback as a mismatch with its current revenue and earnings profile. Bears point to the sharp run over five years and potential overheating. Which case do today’s valuation signals support?

    Most Popular Narrative: 29.8% Undervalued

    On the most followed narrative, Rheinmetall’s fair value of €1,721.35 sits well above the last close at €1,209.20. This frames Goldman’s optimism in a very specific way.

    The substantial increase in European and NATO defense budgets, particularly Germany's multiyear boost in core defense spend to 3.5% of GDP, combined with Rheinmetall's strong positioning and minimal competition in critical vehicle and ammunition programs, indicates a large, sustainable order intake pipeline (expected €80-120 billion backlog by mid-2025/2026), directly supporting robust top-line revenue growth for years to come.

    Read the complete narrative.

    Want to understand why this narrative still points to upside even after a 5 year return of roughly 15x? The story leans on sharp projected jumps in revenue, earnings and margins, all compressed into a detailed set of long run contract and backlog assumptions that are not obvious from the headline numbers.

    According to this narrative, the discount rate of 6.02% is applied to those future cash flows and earnings paths to reach the €1,721.35 fair value. The result is a view of Rheinmetall as meaningfully undervalued relative to that scenario, although the recent pullback and volatile 12 month total return of roughly 31% decline also underline how much depends on execution and contract timing.

    Result: Fair Value of €1,721.35 (UNDERVALUED)

    Have a read of the narrative in full and understand what's behind the forecasts.

    However, this Rheinmetall narrative still faces real pressure due to heavy reliance on European government defense budgets and execution risks around rapid capacity expansion and new projects.

    Find out about the key risks to this Rheinmetall narrative.

    Next Steps

    If the mixed tone around Rheinmetall has you unsure, take a closer look at both sides quickly so you can shape your own view using the 3 key rewards and 1 important warning sign

    Looking for more investment ideas beyond Rheinmetall?

    If you want to round out your view beyond Rheinmetall and avoid missing other potential opportunities, put the Simply Wall Street Screener to work for you.

    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.