Rheinmetal and Deliveroo Report Across Industries

In a tale of industry contrast, the German industrial conglomerate Rheinmetall expects continued success, while the UK food delivery service Deliveroo anticipates modest growth.

Rheinmetall Supported by Ongoing Geopolitical Conflicts

In its latest report to investors, Rheinmetall reaffirmed its full-year guidance, citing "very positive" Q3 performance. Since then, Europe's largest munitions manufacturer has expanded its capacity in Ukraine through a new factory that produces artillery shells and armoured vehicles. During a recent visit to a Rheinmetall facility, German government officials reiterated their commitment to increase defence spending but did not specify a timeline.

Investors await Rheinmetall's annual report on Thursday to confirm its 2023 sales and profit margin guidance. The company previously estimated sales of €7.4-7.6 billion (excluding recent acquisitions) and a 12% profit margin. With continued conflicts expected, Rheinmetall's ammunition business is likely to maintain momentum. Accordingly, investors will watch for updated guidance and potential new acquisitions outlined in the report.

Deliveroo Meeting Expectations

The UK delivery firm had previously reported its Q4 trading update in mid-January, striking an optimistic tone. However, its results fell short of the meteoric growth expected among disruptive tech-enabled commerce companies. Nevertheless, the company achieved its best regional performance, seeing gross transaction value (GTV) increase at an annual rate of 7%, compared to just 4% for the group overall. Actual sales growth rose only 1%, offset by promotional marketing activity.

On a more positive note, investors will likely await confirmation in upcoming guidance. The average monthly active customers increased for the first time in a year, which may reflect that the increased promotional spending is proving effective. Investors will now receive greater details on the earnings, including whether Deliveroo will achieve the profitable EBITDA promised in interim results and whether the company will draw from cash reserves again to announce a share buyback to support the stock price.​

Deliveroo Hangs on Neckline Support

Rheinmetall's share price has doubled since the Israel-Gaza conflict last October. However, it is overextended in the short term, leaving scope for significant corrections. Meanwhile, Deliveroo's price action could form the shoulder of a potential head-and-shoulders pattern if neckline support at 107 GBX holds. The stock may pull back towards the 100 GBX round support if invalidated. In contrast, buyers reclaiming 124 GBX could drive prices to the 133 GBX region, as outlined by the left shoulder.

Source: SpreadEx / Deliveroo

Key Takeaways

While German defence manufacturer Rheinmetall expects solid earnings due to ongoing geopolitical conflicts, UK food delivery firm Deliveroo anticipates only modest growth despite achieving its best regional performance and increased promotional spending proving effective.