What a Potential Russia-Ukraine Peace Deal Could Mean for Rheinmetall Shares

Rheinmetall’s stock has soared on the back of rising European defence spending and persistent geopolitical tensions. But with recent headlines suggesting peace talks between Russia and Ukraine are gaining traction, investors may be wondering — could this derail the rally, even if only temporarily?

In recent days, diplomatic discussions aimed at ending the Russia Ukraine war have escalated. Talks originally scheduled for senior ministers from Ukraine, the US, UK, France and Germany were downgraded to meetings among lower level officials. Despite this, Ukraine’s foreign and defence ministers travelled to London to hold bilateral discussions with their UK counterparts.

A controversial US peace proposal is now at the centre of attention. The proposal would freeze frontlines and formally recognise Russia’s annexation of Crimea — a move Ukrainian President Volodymyr Zelensky firmly rejected, stating: “There is nothing to talk about – it is our land, the land of the Ukrainian people.”

Although the talks mark a shift toward diplomatic engagement, the path forward remains highly uncertain. Any deal would likely require painful territorial concessions from Ukraine, which have so far been ruled out by Kyiv.

Why Peace Impacts Rheinmetall in the Short Term

Rheinmetall’s recent momentum is closely tied to the war in Ukraine. The company has become a key supplier for NATO-aligned countries looking to rebuild stockpiles and upgrade military capabilities.

If a credible peace agreement emerges, it may trigger short term market jitters. A sudden drop in perceived geopolitical risk could reduce investor urgency around defence names, particularly those like Rheinmetall with direct exposure to European rearmament cycles.

However, it’s critical to understand that the shape of the deal matters. A “frozen conflict” or ceasefire without full resolution may have minimal impact on defence spending trajectories. Ongoing instability, even at lower intensity, could sustain demand for Rheinmetall’s products.

Structural Tailwinds Remain Intact

Despite possible short term pullbacks, Rheinmetall’s long term fundamentals remain strong. EU nations are still on track to significantly raise defence budgets, and Rheinmetall is not solely reliant on artillery or tank shells. The group has growing divisions in military vehicles, air defence systems, and digital battlefield technology.

Defence sales are expected to rise 35 to 40 percent this year alone. These figures reflect multi year procurement plans that will not be reversed by a single diplomatic breakthrough.

Eyes on Q1 Earnings – 8 May 2025

Investors should also keep a close eye on the company’s upcoming earnings release. Rheinmetall is scheduled to report on 8 May 2025, with a consensus EPS forecast of €2.22.

While a strong result is expected, any earnings miss (particularly in light of seasonality or delays in contract execution) could compound concerns of short term volatility. Still, given order book strength and anticipated revenue growth, a significant miss appears unlikely.

Crucially, management guidance for the second half of the year will likely carry more weight in shaping the stock’s direction.

Long Term Outlook: Upside Into 2030

My full equity report outlines a long term positive view on Rheinmetall stock. The company is well positioned to benefit from:

• Ongoing NATO rearmament cycles

• Technological leadership in European defence

• Robust order book visibility and expanding margins

Even in a scenario where peace is reached, the geopolitical landscape has permanently shifted. Countries are rethinking military preparedness, and Rheinmetall stands to be a key beneficiary of that recalibration.

Want the full picture?

Download my 70-page Rheinmetall equity research report for detailed valuation, peer comparisons, financial forecasts, and a full risk assessment.