RHM has snapped back 6% on Wednesday and 11% on the week — yet the stock remains nearly 19% below where it traded a month ago, making today's earnings release the first real test of whether the recent selloff was overdone.
The recovery stands out against a mixed peer backdrop. BAE Systems gained roughly 2% on the day and is the only major European defense name to hold positive ground on the week. SAAB B is essentially flat over the same period, while Leonardo fell nearly 7% and Theon International dropped over 10%. RHM's one-day bounce is leading the sector, but the month-long drawdown is also the deepest among its close peers — the stock has been the outlier in both directions.
The insider accumulation story, covered in yesterday's note, is now the central context for the print. CEO Armin Papperger has bought shares on five separate occasions since late May, spending over $14 million at prices ranging from roughly €954 to €1,405. The Supervisory Board Chairman and COO also added shares. Net insider buying across the 90-day window totals nearly 12,000 shares worth approximately $15.7 million — all purchases, no sales. That buying happened into a falling stock, and with the shares now recovering toward the upper end of Papperger's recent purchase range, the print will determine whether that conviction is immediately vindicated or tested further.
The valuation debate is live. Analysts hold a consensus target near €1,766, roughly 68% above Wednesday's close of €1,051 — a gap that reflects either deep undervaluation after the drawdown or targets that haven't yet adjusted to a changed earnings outlook. The forward earnings picture has some support: the 12-month forward EPS growth factor scores in the 89th percentile, and near-term EPS momentum is also strong at the 77th percentile. Against that, recent earnings history is sobering — the last two reporting events each produced a one-day decline of between 5% and 15%, with five-day moves as severe as -22%. The lending market is not adding pressure: availability is extraordinarily loose at nearly 5,800%, borrow cost is a negligible 0.56%, and the short score has eased to 29.4 from a recent peak above 31.
Today's report is therefore less about the defense spending thesis — broadly intact — and more about whether the underlying financials can justify a stock that insiders have been aggressively defending while the market has been aggressively selling.
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