A Top-level Insider at Rheinmetall AG Just Bought Stock

3 minutes read
Page's meta description as image.

Top-level insiders tend to have an excellent understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the stock is attractive.

In this report, we are going to highlight a large purchase from a top-level insider at Rheinmetall AG (RHM:GR). Rheinmetall is a German company that specializes in security and mobility solutions. The group’s Defence sector is Europe’s foremost supplier of army technology, while its Automotive sector is a first-tier supplier of modules and systems to the automotive industry. The company is listed on Deutsche Börse’s Xetra and currently has a market cap of around €10.86 billion.

CEO Purchase

2iQ’s data shows that on June 27, Rheinmetall’s CEO Armin Papperger purchased 825 shares at a price of €242.51 per share. This trade cost the insider approximately €200,000.

Trading Skill 

Mr. Papperger – who has served as CEO and Chairman since January 2013 – has a great track record when it comes to stock purchases. For example, last September, he picked up 2,150 shares at a price of €142.66 per share. Since then, the stock has risen as high as €273. Our model gives the insider a long-term Trading IQ of a high 113.

Given that Rheinmetall stock has more than tripled in price since the start of 2022, it’s interesting that Mr. Papperger is adding to his holding now. It suggests that he expects business performance – which has been strong recently – to get even better.

Strong Demand

Rheinmetall’s Q1 results were very good, thanks to high demand for defense solutions.

For the period, sales were up 8% to €1.4 billion. Operating free cash flow improved by €357 million to -€105 million, setting a new record for the first quarter.

Looking ahead, the company said that it is well on its way to achieving its targets for the year and for further improvements in both sales and income in the current fiscal year. It noted that its backlog at the end of Q1 was €28.2 billion, up 8% year on year.

We are still on track to achieve our ambitious targets for sustainable, profitable growth. Many countries are expanding their military procurement. The historical turning point and the resulting increase in military demand are beginning to manifest themselves in the form of specific successful orders. With its wide range of technologies, Rheinmetall is promisingly positioned to play a key role as a leading military supplier in the long term – both for Germany and its partner nations,” commented Mr. Papperger.

In light of these results, we see the insider buying here as a bullish development.