Rheinmetall, 123fahrschule, Freenet – On the verge of a further upward surge

Rheinmetall – All-time high in sight

Even a Trump victory and the possible end of the war in Ukraine, as the new US president announced in an interview, could not harm the share price of the Düsseldorf-based arms company. Instead, after a brief dip below the EUR 465.00 mark, the Rheinmetall share is heading for a new all-time high of EUR 571.80. After that, the path beyond the EUR 600 mark would be clear.

The price was covered by strong quarterly figures last week. The team led by CEO Armin Papperger once again reported record figures. In the first nine months of the year, the Company's revenue rose significantly by EUR 1,650 million or 36% to EUR 6,268 million, compared with EUR 4,618 million in the same period of the previous year. The share of sales from business with German customers rose by 6 percentage points to 30% in the first three quarters of 2024, while the share of international sales was 70%.

By September 30, 2024, operating income increased to EUR 705 million, up EUR 295 million or 72% from the previous year's figure of EUR 410 million. This increase in operating income was driven not only by revenue growth but also by the earnings contribution from Rheinmetall Expal Munitions, which was acquired in Spain in August 2023. The Company's operating margin improved to 11.3% by the end of the third quarter of 2024, compared with 8.9% in the previous year.

Earnings per share from continuing operations improved to EUR 7.32 in the first nine months of fiscal year 2024, compared with EUR 4.88 in the same period of the previous year.

123fahrschule – Green light despite traffic light stop

There is positive news for the shareholders of 123fahrschule SE. According to current information, the coalition break had no effect on the digitally operated driving school chain with a focus on e-learning. This is because the planned amendment to driving school training, which was presented by the Federal Ministry of Transport in mid-October and includes, among other things, the introduction of online theory or the use of a simulator for switching skills, will be implemented unchanged despite the coalition break.

The reason for this is that these changes are implemented almost exclusively at the level of an ordinance and, therefore, only require the approval of the Bundesrat (Federal Council). In the next few years, 123fahrschule plans to also train learner drivers on simulators, with the Company playing a pioneering role in the digital sector.

This was not the only positive announcement in the past few days, as the Cologne-based company also presented excellent figures. After nine months, the Company generated a turnover of EUR 16.8 million, which corresponds to an increase of 8%. In the third quarter alone, a turnover of EUR 5.7 million was recorded, which corresponds to an increase of 11% compared to the previous year.

The Company is currently focusing on increasing profitability. The Cologne-based driving school reported EBITDA of EUR 0.747 million, compared with EUR 0.2 million the previous year. In the third quarter, EBITDA reached EUR 0.2 million.

Analysts at mwb research have confirmed their "Buy" recommendation with a target price of EUR 6.20. They forecast revenues of EUR 22.6 million and EBITDA of EUR 0.4 million for 2024. Earnings per share are expected to come in at EUR -0.50 for the current year and EUR -0.25 for the following year.

The experts at NuWays also see 123fahrschule SE as a stock that could multiply in value and set a target price of EUR 7.20. The current price is EUR 2.60.

Freenet – On course for an all-time high after raising its forecast

The telecommunications company Freenet also reached a new annual high. Following the release of its third-quarter results, the stock has surged and is currently at EUR 29.10, making strong strides toward its all-time high of EUR 33.10 from August 2015.

The dividend pearl, with a yield of over 6%, reported a revenue increase of 2.1% to EUR 618.50 million in the third quarter of 2024. EBITDA rose to EUR 127.8 million, an increase of 5.1% year-on-year and slightly above market expectations of EUR 125.6 million.

The streaming platform Waipu-TV recorded strong growth in its customer base. With 131,600 new customers in the third quarter, Freenet significantly exceeded DZ Bank's expectations. The TV and media segment generated a strong revenue increase of 14.8% to EUR 98.6 million. Simon Keller of Hauck & Aufhäuser expects Waipu-TV to contribute to a further increase in operating profit in the coming years.

In the mobile communications segment, Freenet gained 54,000 new customers after a weaker second quarter. Nevertheless, high-margin service revenues in mobile communications fell slightly by 0.3% to EUR 434.3 million, mainly due to lower roaming revenues.

The guidance for the year was adjusted accordingly. Freenet raised its revenue and free cash flow expectations and specified its EBITDA targets. The Company now expects revenue of between EUR 2.41 and 2.45 billion and free cash flow of between EUR 270 and 285 million for the year as a whole. Analyst Andrew Lee of Goldman Sachs emphasized that the increased targets for free cash flow offer additional upside potential to expectations.

Both Freenet and the defense contractor Rheinmetall got tailwind from excellent quarterly numbers and are aiming for new all-time highs. The business model of 123fahrschule will not be slowed by the collapse of the traffic light coalition government either. Analysts see multiplication potential here.