The defense companies Renk and Rheinmetall are facing a potential increase in their market values, boosted by geopolitical developments and upcoming political decisions that could foster the defense industry.
Current Developments at Renk
The RENK stock is currently consolidating around 70 euros with a typical fluctuation range between 60 and 80 euros. Despite a high price-to-earnings ratio (P/E of over 60), positive fundamental figures are emerging: In the first quarter, revenue increased by 40%, and earnings per share turned positive. JPMorgan rates RENK optimistically with an ‘Overweight’ rating and sees pullbacks as buying opportunities, especially around the 60 euro mark. Analysts expect earnings per share of 1.41 euros for 2025.
Rheinmetall’s Geopolitical Tailwind
The Rheinmetall stock benefits from strong geopolitical tailwinds due to political resolutions from the EU and increased defense spending by NATO. On June 25, the stock rose by about 1.28% to around 1707.50 euros. The next day, it briefly reached nearly 1800 euros in XETRA trading, with further upward forecasts for the year exceeding 660 euros, depending on the reference point. This represents a single-digit percentage increase.
Impact of the NATO Summit
The upcoming NATO summit could be a decisive factor as it provides planning certainty for defense investments. These developments create upward potential for Renk and Rheinmetall, which JPMorgan sees as an opportunity for long-term investments.
In summary, Renk and Rheinmetall benefit from positive political signals and increasing defense expenditures within NATO. While RENK reports solid quarterly figures, Rheinmetall shows strong price gains with further potential due to favorable political conditions.