Rheinmetall stock could not have started the new year any better. The stock has gained 6.7% since the beginning of the year and even reached a new all-time high. In the last six months, the stock has risen by 22.8% and is now on its way to further gains. It is certainly interesting to take a closer look at this stock.

Rheinmetall: Unclear Profits

Currently, the company is being „hyped“ as the saying goes. In other words, the sentiment has finally improved. For a long time, it seemed that the stock would not move from its spot. It fluctuated between around 240 and 280 euros from autumn 2023 to the winter months.

Now, the breakthrough has been achieved with the stock surpassing the 300 euro mark – without any significantly better news. Instead, the company has regained a larger number of investors or a larger trading volume, indicating a growing interest.

In the past few days, around 40% more shares have been traded than usual, indicating a growing trend. Who would be surprised? In 2022, Rheinmetall gained 124% and another 54% in the past year 2023. Unfortunately, the wars not only boosted the arms business but also heated up the sentiment. However, it is difficult to predict how far the hype will go.

Rheinmetall: Not Cheap

In formal terms, the stock is not cheap. The current price-earnings ratio for the past year is estimated at around 22 to 23, depending on earnings estimates. As earnings are expected to increase in the current year, the market now expects a 2024 P/E ratio of just under 16. This would typically be a fair price for this company, but not a bargain.

The price-to-sales ratio (P/S) for the current year is good at around 1.5, but not particularly cheap. Many investors are hoping for even higher business growth in the coming years. The special asset Bundeswehr worth 100 billion euros has not yet been distributed – and this is where speculation and hopes come into play.

The discussion about arming Ukraine has also been revived. It is said that they are running out of ammunition, and Rheinmetall could benefit from this. In my opinion, this means that the stock and the company are currently at a record high and are relatively solidly valued. However, the hopes for the stock are based on speculation and discussions. For value portfolios, this is still too thin.

Rheinmetall: Records yes – Substantial value not enough – WKN: 703000 – ISIN: DE0007030009 Source: https://fundamental.aktienscreener.com/DE0007030009/EI/rheinmetall-ag/data